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HUD Updates Preservation and Protection Requirements, Allowances

Addressing industry complaints that it had been neglecting property preservation, the U.S. Department of Housing and Urban Development said Monday it is changing its requirements and reimbursement amounts for property preservation and protection efforts -- a move that will impact thousands of contractors throughout the United States that provide property maintenance and preservation services for HUD-owned collateral. Property preservation specialists have told Housing Wire the change was long overdue. "We've been having to live by the same standards since basically 2002," said one source, who asked to remain anonymous. "What little updating was done through 2005 did little to address our needs, and not only made it hard to provide quality service, but also made it hard for HUD properties to maintained properly. These changes should help." Chief among the updates announced Monday, HUD said it will be increasing cost reimbursements for most P&P services, as well as reimbursements for inspections. The department also said it is expanding trigger events that necessitate an inspection to include conditions that may signal a non-monetary default, as well as increasing the total number of allowable inspections each year on a HUD-insured property. Other changes include:
  • An increase in the maximum allowable securing fee to allow for the re-securing of a property without prior approval
  • Clarification of the distinction between temporary and permanent roof repairs, and clear guidance when each is appropriate
  • Clarification of conditions under which HUD will accept conveyance of a property with mold
  • A new requirement for the use of digital photographs and a new flat-fee reimbursement of $30.00 for all photographs, regardless of the number provided
  • An update allowing a Mortgagee to claim reimbursement for one initial grass cut in each growing season
  • An update allowing a Mortgagee to submit one bid per growing season for recurring lawn maintenance on an oversized lot rather than submitting new over-allowable requests each time the yard is mowed
  • Specific language that excludes normal household cleaning products from the definition of hazardous waste
  • Removal of the requirement for installation of the Reduced Pressure Zone (RPZ) device, except in areas where it is a state or local requirement
  • A significant reduction in the number of local variations to general policy
  • Updates to the Mortgagee appeal procedures that provide additional time for Mortgagees to appeal a re-conveyance decision and additional time for HUD staff (at both appeal levels) to respond.
While the changes represent a large update to HUD's policies on property preservation, the department said the changes did not include a schedule of post-endorsement guidelines, fees and charges. The Department said it is currently researching these fees and intends to issue an update and changes to the schedule sometime in the near future. For more information, visit http://www.hud.gov.

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