FCL_and_Asset_Management_RFI__3.2_(Released_12-21-2018).docx

REQUEST FOR INFORMATION (RFI)

This Notice is issued solely for information and planning purposes - it does not constitute a Request for Proposal (RFP), Request for Quote (RFQ) or any promise to issue a RFP or RFQ in the future. This request for information does not commit the Government to contract for any supply or service whatsoever. Further, USDA-RD is not at this time seeking proposals and will not accept unsolicited proposals. Responders are advised that the U.S. Government will not pay for any information or administrative costs incurred in response to this RFI. All costs associated with responding to this RFI will be solely at the interested party's expense. Not responding to this RFI does not preclude participation in any future RFP or RFQ issued. If a solicitation is released, it will be synopsized on the Federal Business Opportunities (FedBizOpps) website.

Request for Information (RFI) – Legal Services and Asset Management Services

The Rural Housing Service (RHS) Section 502 Single Family Housing (SFH) direct loan program helps very low- and low-income individuals in rural areas attain homeownership. While the program plays a vital role in rural American communities, growing responsibilities and resource issues have contributed to an increase in the foreclosure inventory. Direct loan servicing is maintained by the National Finance Accounting and Center (NFAOC), under the Chief Financial Officer for USDA Rural Development (The Agency) in St. Louis, MO.

Background:

Before an account goes into foreclosure[footnoteRef:1], the Agency works with the borrowers to resolve the delinquency through various loss mitigation options. Only after those efforts have been exhausted does the Agency accelerate an account. [1: For purposes of this memorandum, the foreclosure process begins at acceleration of the account, and includes any time required to resolve administrative appeals or bankruptcies filed by the borrower.

The Rural Housing Direct portfolio currently has 20,067[footnoteRef:2] accounts (post acceleration) in under process in the State Offices (Non-Centralized) and at the NFAOC (Centralized). Fiscal year goals are in place to centralize all foreclosure activity of all accounts in all States to the NFAOC in St. Louis. [2: Default Management Branch Monthly Books, November 2018]

The NFAOC recognizes the current foreclosure process drives up Agency costs, borrower debt, and diverts resources from efforts to achieve Agency goals, such as comprehensive support of existing Section 502 homeowners, successful origination, and identification and implementation of best practices to continuously improve the program.

Purpose of RFI The NFAOC is requesting the supplier community to provide information, comments, best practices, acquisition strategies/approaches, industry operational processes, and ideas that can be used (and/or are currently being used) to implement a focused, optimal turnkey process for account processing from acceleration to sale of property, which would include, if necessary, asset management of acquired properties for the purposes of gathering market research data. The NFAOC utilizes the FiServ/MortServ system of processing and record and would continue to maintain this system of record and require Servicer to update/communicate with this system directly. Additionally, the Servicer must maintain integrity and privacy of case files always in any form of communication/file transfer with NFAOC.

The NFAOC will continue to process the inventory of accounts currently in house and anticipates there may be an inventory or carryover to a newly acquired system of approximately 5,000 accounts along with the estimated, naturally-occurring accelerations.

Request for Information The NFAOC is requesting information, best practices, ideas, acquisition strategies/approaches, industry operational processes, suggested timelines and costs associated with outsourcing these servicing components to either one Integrator/Servicer who can directly provide services to both business lines or to one Servicer/Integrator who can directly provide services to the Agency for each business lines. This information is being used for market research purposes.

1. Nationwide Foreclosure Processing and related Legal and ancillary services

The scope of these services shall encompass all 50 States along with the following territories, Western Pacific Islands, Puerto Rico and U.S. Virgin Islands, all serviced by USDA Rural Development/NFAOC. The goal is to obtain a turn-key solution, so Agency can hand off post-foreclosure properties to another business model where the result is either a recorded mortgage under the name of the Agency or a recorded sale.

These services can be defined as Legal services, post-acceleration letter notification by the Agency[footnoteRef:3], in connection with foreclosures with or without deficiency judgements, bankruptcies, evictions and/or actions to recover possession and mediation, appraisal services for valuation of the property and inspections and preservation of the properties to maximize value. [3: Appeal rights must be offered to borrowers as per regulatory requirements]

The NFAOC currently experiences 14,000 annual accounts in acceleration. The current cure rate is approximately 40%. A Servicer could expect to process up to 8,000 accounts per year plus the initial 5,000 accounts in inventory. The Servicer would oversee the foreclosure process from the acceleration until NFAOC obtains control and title of the asset. The Servicer would be responsible for status reporting, tracking legal and other associated expenses, obtaining valuation of the property and ensuring an efficient, accurate and complete foreclosure process occurs while overseeing and maintaining the security property (whether occupied or abandoned).

In addition to processing the foreclosure requirements as per USDA regulatory requirements (7 CFR 3550), Servicer may be required to legally process a bankruptcy filing on behalf of the USDA, legally process and remove (possessory action) a borrower or other occupant from the acquired home, take part in State-required mediations, etc.

2. Nationwide Asset Management Services

The scope of these services shall encompass all 50 States along with the following territories, Western Pacific Islands, Puerto Rico and U.S. Virgin Islands, all serviced by USDA Rural Development.

The NFAOC recognizes in many instances the property will be acquired by the Agency. The Servicer would be tasked with full administration, property management and costs (taxes, insurance, etc.) along with the property valuation, listing/marketing and Sale of the Property, Net Proceeds and reporting back to the Agency as per the USDA Regulatory requirements 7 CFR 3550.

As per 7 CFR 3550.251(c)(1)] or see HB-1-3550 15.4 (A), https://www.rd.usda.gov/files/3550-1chapter15.pdf Agency is required to hold the property for 60 days due to Program versus Non-Program designation/classification, to allow for potential SFH 502 Direct program applicants to consider this home in an exclusive manner. This would need to be incorporated into a Vendor’s model. Classifying the property is critical and one of the unique requirements of this program. The Agency has established minimum standards for existing and new dwellings provided at HB-1-3550 – Chapter 5 located at https://www.rd.usda.gov/publications/regulations-guidelines/handbooks.

It is to be expected that legal services may be needed for Title clouds/issues, evictions and other situations that could and do arise. These legal services provided by the Servicer will be expected to continue to move the property and remove it from the Agency Inventory in a reasonable timeframe. The goal is to have an overall reduction on cost and days in inventory of the property.

Conclusion:

The NFAOC is requesting information, best practices, ideas, acquisition strategies/approaches, industry operational processes, suggested timelines and costs associated with outsourcing these servicing components to either one Integrator/Servicer who can directly provide services to both business lines or to one Servicer/Integrator who can directly provide services to the Agency for each business lines. This information is being used for market research purposes.

SUBMISSION DETAILS:

RFI Responses to the above items are due by Friday January 4, 2019: 1:00pm EST. The responses shall be limited to ten (10) pages. Please submit via e-mail to BOTH: Jack Mitchell (Jackie.mitchell@wdc.usda.gov) and Scott Beckstrand (scott.beckstrand@wdc.usda.gov, with the subject line indicating, "YOUR COMPANY NAME – RFI Response". Proprietary information, if any, should be minimized and MUST BE CLEARLY MARKED. To aid the Government, please segregate proprietary information. Please be advised that all submissions become Government property and will not be returned. No telephone or email inquiries will be accepted and requests for solicitation packages will not be granted, as no solicitation has been prepared or planned at this time.

QUESTIONS:

Questions regarding this announcement shall be submitted in writing via email to BOTH: Jack Mitchell (jackie.mitchell@wdc.usda.gov) and Scott Beckstrand (scott.beckstrand@wdc.usda.gov with the subject line marked "QUESTIONS, RFI Response". Verbal questions will NOT be accepted.

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