Understanding the Convey Process

P&P GENERAL SESSION
Quality Expectations
State of the Network
On-Time Performance and Quality Results
2013-2014
State of the Network
On-Time Performance Results 2013-2014
Average Days to Complete Initial and Convey Orders
5.00
4.00
3.00
2.00
1.00
State of the Network
Quality Results 2014
Number of NPL's
SQA Score
600
3.60
500
3.55
400
3.55
477
3.50
424
374
300
377
372
3.49
3.45
200
3.40
100
3.35
3.51
3.50
March
April
3.40
0
JANUARY
FEBRUARY
MARCH
APRIL
May
3.30
January
February
May
State of the Network
Quality Results 2014
Number of Reconveys
350
300
302
250
242
200
181
150
132
100
88
50
0
January
February
March
April
May
Understanding the Convey Process
Understanding the Convey Process
Vendor reports
post sale
conditions
Safeguard
reviews and
reports ICC if all
conditions met
Client conveys
to HUD
FSM Inspection
HUD accepts
property
Understanding the Convey Process
Post-Conveyance Inspections
• An inspection to determine if the property meets the
HUD Compliance Standard.
• Performed by Field Service Managers (FSMs),
independent contractors retained by HUD.
• Typically completed 24-72 hours after property is
conveyed to HUD.
Understanding the Convey Process
Post-Conveyance Inspections
• FSMs complete detailed inspection report and
submit to HUD
• HUD evaluates in detail this inspection report
Understanding the Convey Process
HUD Inspection Report (HIPR)
Understanding the Convey Process
Other Errors Identified During a HUD Inspection
• Non-Performance Letter (NPL)
– Issued when insufficient or improper property
preservation work is found at the property
– No monetary loss or response required, but clients still
care
Understanding the Convey Process
Other Errors Identified During a HUD Inspection
• Demand Letter
– Issued when HUD is seeking reimbursement of funds for
the following reasons
o Insufficient supporting documentation for work completed
o Mortgagee neglect typically < $2,500 to repair
Understanding the Convey Process
Other Errors Identified During a HUD Inspection
• Preliminary Notice of Intent to Reconvey (PNOIR)
– FSM may recommend based on HPIR
– HUD will also review loan history to make the decision
Understanding the Convey Process
Reconvey Notice Reviews
• Safeguard’s independent Quality
Assurance group reviews for
potential:
–
–
–
–
FSM errors
Client errors
Safeguard errors
Vendor errors
Understanding the Convey Process
Reconvey Notice Reviews
• Safeguard will appeal if FSM or
client errors are identified
Understanding the Convey Process
Common Errors Causing Reconveys
• Roof tarps
– Temporary measures and roof is expected to be repaired
prior to conveyance
• Active roof leaks
• Water intrusion (non-roof related)
• Mold not remediated and/or source not fully
addressed
Understanding the Convey Process
Common Errors Causing Reconveys
• Structural damage
– Includes settling if not reported at initial secure
• Unfinished renovations
Understanding the Convey Process
Cost of Reconveys
Average cost of a reconvey is $30,000
• Holding costs
– This is the cost associated with the amount of time the
property is in the banks inventory to the time it is
reconveyed back to HUD
• Repair costs
– Safeguard may be responsible for some or all of the costs
to repair to the property
Understanding the Convey Process
Cost of Reconveys
• Maintenance costs
– If Safeguard is responsible, the client cannot be charged
for any routine maintenance work (inspections, grass cuts,
winterizations).
If you are responsible for a reconvey, you can receive
chargebacks for any or all of the above.
Understanding the Convey Process
How to Prevent a Reconvey
• Report all new and worsening conditions and
damages
– Complete a Property Condition Report on initial secures at
conveys at minimum. Best practice is to complete on all
P&P orders where you are entering the property.
– A condition is worsening if it is not the exact same scope
as reported in the Restated Bids section of Vendor Web.
– Provide new bid if worsening.
Understanding the Convey Process
How to Prevent a Reconvey
• Report all new and worsening conditions and
damages (cont’d)
– Include missing items and “mortgagor neglect”
– Identify the source
– Know the “BIG 6”
Understanding the Convey Process
How to Prevent a Reconvey
• Understand the HUD allowable amounts
– Ensures only necessary bids submitted and work
completed timely
• Ensure necessary photos are present on each and
every order
– Photo documentation is only means of ensuring the
property is ICC
• Follow work order instructions
Understanding the Convey Process
Reconvey Example – Water & Roof Damage
•
•
•
Initial secure completed on 8/23/12
No roof damage reported on initial secure,
no photos to support interior of property
was in convey condition
Water, fire and other damages not
reported on subsequent inspection
updates
•
•
Reconvey initiated by FHA 5/14/13 due to
roof and water damage
Due to inadequate photos, Safeguard unable
to determine if water damage was present
prior to conveyance
Cost to Vendor > $30,000
Understanding the Convey Process
Reconvey Example – Water & Roof Damage
•
•
On 9/20/13 contractor replaced sump pump
and provided photos of a barn with the roof
intact
No photos of the barn were submitted on
the UTIL or GCL orders
•
•
On 10/17/13 photos support roof
collapsing but vendor reported no
new damage
Property reconveyed due to
dilapidated barn
Cost to Vendor > $30,000
Understanding the Convey Process
Reconvey Example – Water & Roof Damage
•
•
•
•
Initial secure completed on 10/9/13
No roof damage reported on initial secure
Mold and water damage reported, but no bids
to address
One photo of attic provided
•
•
Reconvey initiated by FHA 12/19/13 due to
active roof leak, water and mold damage
Due to inadequate photos, Safeguard unable
to determine if roof leak, water and mold
damage was present prior to conveyance
Cost to Vendor > $30,000
Developing an Eye for Quality
Property Damage Assessment
Identify, Address, Report, Bid
• Identification of damages and the source of damage
is essential to protecting a property
• Addressing damages utilizing allowables while on
site helps prevent further damage from occurring
Property Damage Assessment
Identify, Address, Report, Bid
• Reporting in detail the conditions that exist at the
property gives our clients a full picture of the
condition of their property
• Bids provided with supporting details such as why
the repair is necessary, dimensions, materials, and
resources needed to complete
Property Damage Assessment
Identify
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•
•
•
Property Condition Report
Crew Training & Incentives
Review Missed Opportunities with Crews and Office
Implement a Check Out Process Using Photo Direct
Property Damage Assessment
Results of Poor Identification
•
•
•
Vendor provides photos of basement
walls cracking but reports as
mortgagor neglect
True source of damage not identified
and no bids to repair provided
HUD inspector identifies as
structural damage, reconvey in
process
Property Damage Assessment
Address
• Train crews on proper use of allowables
• Photo documentation must support actions taken and
amount of allowable used
• Ensure the source of the damage is being addressed
not just the symptoms
• Properly stock trucks with materials and equipment
necessary to address while on site
• When to call Safeguard?
Property Damage Assessment
Address Damages – Missed Opportunities
•
•
•
Proper use of allowables ensures that
the critical issues at a property are
addressed while on-site
Field crews and office staff should be
trained to identify all conditions at a
property where an allowable can be
used
Misuse or not using allowables reduces
your profitability and places
responsibility of unaddressed issues on
your company
Property Damage Assessment
Report
• Utilize the Property Condition Report
• Provide all supporting details
– Source/cause, dimensions, scope of damage, implications if not
addressed
• Report worsening conditions every visit to the property
• The office staff must act as the final quality control
before submitting the order
• When in doubt, report!
Property Damage Assessment
Reporting Errors
Property Damage Assessment
Reporting Errors
•
•
•
Vendor submitted this photo and reported
seepage not causing further damage on initial
secure
Subsequent vendor reports inoperable sump
pump
Initial secure vendor assessed chargeback for
water damage repairs and new sump pump
Property Damage Assessment
• Details to include:
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–
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Bid
Full description of bid to include source of damage if applicable
Dimensions
Materials
Resources (people, rental equip., licensed sub, etc.)
Why is the bid needed
What are the implications if not approved
• Use a cost estimator to determine fair and consistent pricing
• Ensure there are no allowables that could be used to complete work
• Bid to repair the source and the symptoms
Property Damage Assessment
Good Bid Detail
Property Damage Assessment
Poor Bid Detail