Sec. Held Loan Servicing Solicitation B through M Amendment 2.docx

Secretary Held Loan Servicing 86614920R00005

Section B DESCRIPTION/SPECIFICATIONS

1. CLIN 0002 SERVICE PRICE (and corresponding CLINS for each option period) The Contractor shall be paid a fixed unit price per loan serviced during the month invoiced. For example:

Month 1: 600,000 Loans serviced x $1.00 unit price per loan = total monthly invoiced $600,000.00 Month 2: 650,000 Loans serviced x $1.00 unit price per loan = total monthly invoiced $650,000.00 The monthly service price shall be compensation for all requirements not elsewhere specified including but not limited to all labor and other costs related to servicing all loans in the portfolio, updating the service to accommodate policy, legislative or regulatory changes required to service all loans in the portfolio and relating to any of the tasks in this PWS.

2. CLIN 0004 TRANSTION OUT

The transition out CLIN will only be ordered in the event that HUD determines to not exercise the next option period or in the last performance period. This will be a unilateral decision by HUD and may be ordered at any time during the contract period.

3. REIMBURSEABLES

HUD will reimburse the Contractor for only the following expenses upon presentation of an approved invoice and adequate supporting documentation without prior approval by the COR. Any dispute as to whether an expense is to be reimbursed will be forwarded to the Contracting Officer for resolution.

· Actual recording fees associated with filing release documents

· Actual cost of lien searches as required for validation on HOPE mortgages.

· Actual cost of registration for Mortgage Electronic Registration System (MERS).

Reimbursement of other disbursements must be pre-approved by the COR prior to incurring the expense.

One Time Reimbursable are those expenses that occur only once and are necessary at the beginning of the contract or paid as Transition n costs. They include the following: Initial contractor employee training but not recurring training after the transition period is over; Contractor employee travel to initial training but not travel after the transition period is over; Office set-up expenses such as space build out, IT installation, etc. but not recurring monthly lease or phone bills; Moving of all the fireproof file cabinets from the former contractor's office site to the new contractor's office site; it does not include: Computer equipment, phones, or furniture; lump sum insurance, employee bonuses, or other similar expenses

4. Pricing Schedule Base Period

Estimated Quantity

(HUD estimates that an average of 600,000 loans will be serviced monthly during the base period but the # of loans could range from 1 to 1,300,000 loans serviced per month during the base period).

*Unit Price per Loan per loan serviced for a quantity of loans serviced between 1 and 1,300,000 loans.

(based on Unit Price estimated average of loans 8 months. 600,000 x Unit Price Per Loan x 8 Months = Total Estimated Annual Price)

Estimated NTE

$2,400,000.00

NA

TOTAL ESTIMATED PRICE FOR BASE PERIOD

*For the purposes of calculating the Total Annual Price please use the estimated monthly quantity of 600,000 loans serviced.

Option Period 1

Estimated Quantity

(HUD estimates that an average of 650,000 loans will be serviced during option period 2 but the # of loans could range from 1 to 1,300,000 loans serviced per month during option period 1)

1 – 1,300,000

*Unit Price per loan serviced for a quantity of loans serviced between 1 and 1,300,000 loans.

(based on Unit Price estimated average of loans 12 months. 650,000 x Unit Price Per Loan x 12 Months = Total Estimated Annual Price)

$2,400,000.00

TOTAL ESTIMATED PRICE FOR OPTION PERIOD 1

For the purposes of calculating the Total Estimated Annual Price please use the estimated monthly quantity of 650,000 loans serviced.

Option Period 2

Estimated Quantity

(HUD estimates that an average of 675,000 loans will be serviced monthly during option period 3 but the # of loans could range from 1 to 1,300,000 loans serviced per month during option period 2)

1 – 1,300,000

* Unit Price per loan serviced for a quantity of loans serviced between 1 and 1,300,000 loans.

(based on Unit Price estimated average of loans 12 months. 675,000 x Unit Price Per Loan x 12 Months = Total Estimated Annual Price)

$2,400,000.00

TOTAL ESTIMATED PRICE FOR OPTION PERIOD 2:

*For the purposes of calculating the Total Estimated Annual Price please use the estimated monthly quantity of 675,000 loans serviced.

Option Period 3

Estimated Quantity

(HUD estimates that an average of 700,000 loans will be serviced monthly during option period 3 but the # of loans could range from 1 to 1,300,000 loans serviced per month during option period 3)

* Unit Price per loan serviced for a quantity of loans serviced between 1 and 1,300,000 loans.

(based on Unit Price estimated average of loans 12 months. 700,000 x Unit Price Per Loan x 12 Months = Total Estimated Annual Price)

Attachment A, paragraph 13.1

$2,400,000.00

TOTAL ESTIMATED PRICE FOR OPTION PERIOD 3

*For the purposes of calculating the Total Estimated Annual Price please use the estimated monthly quantity of 700,000 loans serviced

Option Period 4

Estimated Quantity

(HUD estimates that an average of 725,000 loans will be serviced monthly during option period 4 but the # of loans could range from 1 to 1,300,000 loans serviced per month during option period 4)

1 – 1,300,000

* Unit Price per Loan per loan serviced for a quantity of loans serviced between 1 and 1,300,000 loans.

(based on Unit Price estimated average of loans 12 months. 725,000 x Unit Price Per Loan x 12 Months = Total Estimated Annual Price)

$2,400,000.00

TOTAL ESTIMATED PRICE FOR OPTION PERIOD 4

*For the purposes of calculating the Total Estimated Annual Price please use the estimated monthly quantity of 725,000 loans serviced

Secretary Held Loan Servicing (Non-HECM) 86614920R0005

Section C Performance Work Statement (PWS) Secretary Held Loan Servicing (Non-HECM)

Vision Statement

Provide exceptional loan servicing for a variety of mortgages, notes, and security instruments while maintaining a high standard of customer service.

1 General Information

1.1 Introduction

The Department of Housing and Urban Development (HUD), Office of Single Family Asset Management, Servicing and Loss Mitigation Division aka HUD's National Servicing Center requires contractor support in Secretary Held mortgage loan servicing to maximizing recoveries while maintaining a high standard of customer service.

1.2 Background

The Federal Housing Administration (FHA), that provides homeownership opportunities for first time homebuyers as well as borrowers who, because of limited income or impaired credit history, are under-served by conventional mortgage markets. FHA insures approved lenders against the risk of loss on loans they finance for the purchase, and in some instances, rehabilitation of single-family homes.

Although primarily a mortgage insurer, HUD has occasion to become the holder of primary and subordinate mortgages as a result of its loss mitigation program and specialized loan programs. These loans and notes are currently serviced for HUD by a private sector Contractor. A specialized business service provider called Single Family Mortgage Asset Recovery Technology (SMART) is utilized by the Contractor for all loan programs serviced under this contract. Additionally, HUD's Contractor interfaces with other HUD information management systems.

The following information provides a description and reference for regulatory guidance of the specific programs that the Contractor shall comply with:

Title II Assigned First Mortgages (Forward)

First mortgages transferred to HUD through the former Assignment Program, which provided forbearance relief for delinquent borrowers. The termination of the Assignment Program was effective as of April 26, 1996. The HUD regulations for assigned first forward mortgages are in 24 CFR Part 203, particularly 24 CFR 203.350-203.353, and 203.404, and 203.477. Additionally HUD policy requirements are contained in HUD Handbooks 4000.1; 4330.1 REV-5; 4330.2 REV-2; 4335.2; Housing Notice H97-74; other applicable Housing Notices, Mortgagee Letters; and any subsequent publications regarding the aforementioned loans, as well as verbiage in the Note, Mortgage or Deed of Trust. Assigned mortgages are serviced as traditional whole loans.

Purchase Money Mortgage (PMM)

PMMs and Ferrell PMMs are direct loans from HUD to certain eligible borrowers and/or non-profit corporations. Ferrell PMMs were the result of a lawsuit in which borrowers were given an opportunity to avoid foreclosure. HUD allowed those borrowers to purchase a home from REO and provided second mortgages in cases where the properties cost was more than the original loan. HUD originates and services the loan debt for Servicing for all PMMs is based on the terms of the mortgage.

235 Recapture Program

The former 235 Mortgage Subsidy program provided monthly assistance payments to help low income borrowers afford homeownership. The Housing and Community Development Acts of 1980 and 1981 that changed Section 235 of the National Housing Act requires the Secretary of HUD to recapture all or a portion of the subsidy assistance payments when the mortgage is terminated through payoff or sale of the property. The Section 235 Homeownership Program expired on October 1, 1989, but there still may be legacy loans. Mortgages are subject to recapture where the firm commitment is dated on or after May 27, 1981 and are calculated by the Contractor. HUD regulations governing the program are contained in HUD Handbook 4330.1 REV-5 and Housing Notice H 94-66 as extended by Housing Notice H 2002-11.

Partial Claim (PC) Subordinate Mortgage

A Partial Claim, a loss mitigation tool, available to delinquent eligible borrowers, whereby HUD advances funds to the servicing lender to cover the delinquent arrearage for the borrower. In exchange, the borrower signs an interest free subordinate note and mortgage promising to pay HUD upon payoff of the FHA insured 1st mortgage or at the sale of the property. The Partial Claim as a loss mitigation option was first introduced in Mortgagee Letter (ML) 96-61, superseded by ML 03-19, and then superseded by HUD Handbook 4000.01 except for the model mortgage and note attachments. Servicing tasks are generally limited to collection of the note when the first mortgage is terminated through payoff or sale of the property. The HUD partial claim regulations are in 24 CFR Part 203, particularly 24 CFR 203.341, 203.371, and 203.414. Additionally, HUD policy requirements are contained in HUD Handbooks 4000.1; 4330.2 REV-2; 4335.2; all applicable Housing Notices; Mortgagee Letter 2020-22, any subsequent publications regarding Partial Claim Subordinate Mortgages; as well as verbiage in the Note and Mortgage.

Nehemiah Program

The Nehemiah Program, which has been terminated by HUD, was a down payment assistance program. These loans carry a second mortgage requiring repayment of all or a portion of the subsidized amount paid by HUD on behalf of the borrower. Payment of these mortgages is due upon sale or payoff of the first mortgage.

Title VI of the Housing and Community Development Act of 1987 established the Nehemiah Housing Opportunity Grants Program (N HOP), which authorized HUD to make grants available to nonprofit organizations to enable them to provide loans to families purchasing homes that are constructed or substantially rehabilitated in accordance with a HUD-approved program.

HUD policy governing the program are contained in Housing Notice H 96-3, extended by Housing Notice H 2002-13, and superseded by HUD Handbook 4000.1. The servicing guidance for this portion of the contract can be found in HUD Handbooks 4330.1 REV-5, Chapter 11; 4330.2 REV-2; 24 CFR 235; Housing Notices H 94-66, as extended by 1-1 2002-11; H 96-3 as extended by H 2002-13, and superseded by HUD Handbook 4000.1; any other applicable Housing Notices, Mortgagee Letters; and any subsequent publications.

Good Neighbor Next Door Program (GNND)

As part of its commitment to preserve neighborhoods, HUD sells foreclosed homes in designated revitalization areas at a 50% discount to police offices, teachers, fire fighters and emergency medical personnel. Program participants must agree to occupy the subject properties for a period of three years. Program requirements call for second mortgages on these loans as a means to secure compliance with the occupancy requirement. Where program compliance is fulfilled, HUD releases the second mortgage without charge to the mortgage holder. Failure to comply with the terms required by the Program will result in collection activity and possible foreclosure. GNND is implemented through HUD regulations 24 CFR 291.500-291.565 and HUD policy requirements in Handbook 4000.1, Housing Notices, Mortgagee Letters, and any subsequent publications.

Asset Control Area Program (ACA)

This program provides for the discounted sale of HUD owned properties in designated revitalization areas to local government agencies or non-profit groups willing to rehabilitate the properties and resell them to income eligible borrowers who must agree to occupy the property for a defined period of time. The ACA program requires placement of two different second mortgages in a sequential order as a means to secure program compliance. A compliance note provides recourse in the event the non-profit fails to complete the rehabilitation or defaults on any of the other program requirements. The second enforcement note provides recourse against the eventual owner occupant purchaser of the property to ensure that the occupancy requirement is met. When program compliance is fulfilled, HUD releases the appropriate second mortgage without any charge to the non-profit or borrower.

Initially implemented as a Demonstration Program in 1998 following enactment of Public Law 105276 and strengthened in September of 2002. HUD regulations governing the program are contained Notices H 97-51; H 97-73; H 99-30; HUD guidelines found in HUD Handbooks 4000.1; 4330.2 REV-2; 4330.1 REV-5; 4335.2; 24 CFR 203; applicable Housing Notices, Mortgagee Letters; Standard Operating Procedures and any subsequent publications regarding the aforementioned loans, as well as verbiage in the Note and/or Mortgages.

HOPE for Homeowners (H4H) Mortgages

HUD policy requirements for the H4H program are in HUD Handbook 4000.1. Any changes to the H4H program will be reflected in revised Handbook, Housing Notices, Mortgagee Letters, and any subsequent publications.

This program was introduced as part of The Housing and Economic Recovery Act of 2008 (HERA). Under this program, a borrower facing difficulty with his or her mortgage will be eligible to refinance into an affordable FHA-insured mortgage.

At origination of an H4H mortgage prior to January 1, 2010, the borrower executed a Shared Equity note and mortgage (SEM) in favor of HUD with a fixed dollar amount inserted for initial equity. Initial equity is calculated as the difference between the HOPE mortgage balance and the appraised value at the time of HOPE loan origination. Based on the date of sale, disposition or refinance, HUD is entitled to a percentage of the initial equity pursuant to the schedule stated in the Shared Equity Mortgage. The SEM should be recorded as a second priority lien against the property.

At origination prior to January 1, 2010, the borrower executed a shared Appreciation note and mortgage (SAM) in favor of HUD representing fifty percent (50%) interest in future appreciation. Based on the date of a sale, disposition or refinance, HUD is entitled to receive fifty percent (50%) in future appreciation with a subordinate lien holder(s) who met specific criteria for the HOPE mortgage. The SAM should be recorded as a third priority lien against the property.

All H4H mortgages originated on or after January 1, 2010, an Exit Premium Mortgage (EPM) replaced the SEM and the SAM. Based on the date of sale, disposition or refinance, HUD is entitled to a percentage of the initial equity pursuant to schedule state in the EPM.

The H4H Program was effective for endorsements on or after October 1, 2008, through September 30, 2011. The HOPE for Homeowners program ended on September 30, 2011.

Emergency Home Loan Program (EHLP)

The Dodd-Frank Wall Street Reform and Consumer Protection Act provided $1 billion to the U.S. Department of Housing and Urban Development (HUD) to implement the Emergency Homeowners' Loan Program (EHLP). The statutory authority to provide emergency assistance to homeowners under this program expired on September 30, 2011. Assistance made available under the Emergency Homeowners' Loan Program will continue to be governed by the regulations that existed immediately before September 8, 2014.The program offers a declining balance, deferred payment loan (non-recourse, subordinate loan with zero interest) for up to $50,000 to assist eligible homeowners with payments of arrearages, including:

· Delinquent mortgage payments (principal and interest); and

· Delinquent taxes and mortgage insurance and hazard insurance premiums; and

· Condominium or homeowner's association fees; and

· Late fees assessed by the lender/servicer; and

· Certain foreclosure-related attorney's fees; and

· Lender inspection fees, when required under FHA regulations (24 CFR 203.377) for properties with FHA-insured mortgages that are in default.

In addition to payment of arrearages, EHLP funds will also be used to assist eligible borrowers to make payments of principal, interest, taxes, and insurance (PITI) owed on their first mortgage.

Approved applicants may receive assistance under this program for a maximum of 24 months or may receive a maximum of $50,000 in program loan assistance, whichever occurs first. The 24 months is known as the assistance period. The Fiscal Agent will be responsible for all servicing functions during the assistance period. The Contractor becomes responsible for servicing the HUD note and mortgage subsequent to the 24-month assistance period, (or earlier if the homeowner no longer meets the eligibility requirements for assistance.) This program provides for a 5-Year Loan Forgiveness Period.

Under EHLP, HUD will assist eligible borrowers in Puerto Rico and the 32 states not assisted under the U.S. Treasury's Innovation Fund for Hardest Hit Housing Markets program. The methodology for determining the amount of EHLP assistance that shall be allocated to each state shall be based, in part, on each respective state's relative unemployment measures.

After the first payment is made on behalf of the borrower, the fiscal agent will create an open-ended "HUD Note" and mortgage in the name of the Secretary of the HUD of sufficient size to accommodate the expected amount of the assistance to be provided to homeowner.

Approved applicants will be required to sign the HUD Note and mortgage agreeing to repay in full the principal balance of funds loaned to their household through the EHLP Program, either $50,000 or any amount between $0.00 and $50,000, whichever is lesser and reflects the actual amount loaned to the borrower.

The final balance of the loan shall be provided to the Contractor via electronic upload upon a determination of termination of assistance has been made for a given borrower, per program terms and policies described. The mortgage shall be recorded by the EHLP Fiscal Agent as a subordinate lien to the borrower's first mortgage.

References - All HUD Handbooks, Forms, Housing Notices, Mortgagee Letters, and Federal guidelines are available through the library resource section of the HUD website https://www.hud.gov/program_offices/administration/hudclips/

Standard Operating Procedures (SOPs) for all loan programs serviced under this contract will be utilized

1.3 Constraints

The services identified in this PWS will adhere to the rules, regulations, laws, standards, and conventions identified by HUD as well as within the Federal Government when performing the services in this PWS.

Access to HUD Information Systems - Contractor employees (including subcontractors) who will need to have access to HUD information systems and/or business service providers (e.g. SAMS or SMART) must undergo a background investigation. See Clause HUDAR 2452.239-70 Access to HUD Systems (Deviation).

Security Access - Due to the sensitivity of loan, property and vendor profile data, access to HUD systems and/or business service providers shall be limited to individuals based upon their specific duties and the security of the system. As a condition of obtaining access, Contractor employees requiring access to HUD systems shall follow the procedures as set forth in HUDAR 2452.239-70. HUD may grant, deny, or revoke an individual's access rights to a HUD system based upon the results of the security background check of the individual. The Contractor shall provide written notification to the COR not later than one (1) business day of termination or resignation of any employee granted HUD systems access or when there is no longer a need for access to HUD systems by any Contractor employee. The Contractor shall maintain an up-to-date list that identifies contract employees with access to each of the information systems described in this section and the justification for each employee's level of access.

The COR will request that the Contractor be given access to the computerized systems and/or business service providers and any databases used to track and service Secretary-owned mortgages, not later than five (5) calendar days from receipt of approved security clearance.

The Contractor shall provide hardware equipment that is adequately maintained and fully operational to support all business service providers identified within this PWS. This includes all interface connectivity, application software, interface control document (ICD) testing and documentation to support the requirements of the PWS; NSC accessibility; and access to any SF Asset Management Office including, but not limited to, the HOC offices and HUD headquarters offices. All systems shall be compatible with the HUD platform environment. The Contractor shall ensure all systems are compatible with future environments that HUD may upgrade or into which HUD may migrate. All business servicing providers, websites, and databases developed, enhanced, modified, maintained, and supported for use during the life of this contract shall be in conformity with the accepted standard practices of HUD's IT infrastructure and system development platforms. (http://www.hud.gov/offices/cio/sdm/devlife/def/newstand.cfm)

Internal Controls and Compliance - The contractor shall establish, document, and maintain internal controls appropriate to the services performed under the contract, including separation of duties, audit logs, quality assurance procedures for data integrity, protection of personally identifiable information, authentication of personal identity in transactions with the public, system security, continuity of operations and system change control. The contractor shall answer inquiries, provide documentation, and give access to facilities in support of HUD's audits and internal control and compliance reviews, including the annual audit of FHA's financial statements, annual reviews of internal controls under OMB Circular A-123 and annual reviews of financial system compliance under OMB Circular A-127, portions of this policy have been modified by M-17-26.

Federal standards and requirements - The contractor is responsible for maintaining compliance with Federal Standards and Requirements as they are updated by Congress and the issuing Federal agencies.

Personally Identifiable Information - The contractor shall establish, document, and maintain technical and procedural protections against the release of personally identifiable information. The contractor shall complete a Privacy Impact Assessment annually.

Authentication of Personal Identity - The contractor shall establish, document, and maintain technical and procedural methods to authenticate personal identity in all transactions with the public in accordance with Federal e-Authentication regulations. The contractor shall complete an e-Authentication Risk Assessment report annually on their System Security. The contractor shall establish, document, and maintain technical and procedural protections for system security in accordance with NIST 800.53 REV3 or current version.

The Contractor shall maintain the security and integrity of business service provider's data and/or systems data and must comply with all HUD security requirements including employees taking the required HUD Security Awareness Training. The contractor shall ensure that all functions of the contract are carried out regardless of the capabilities of HUD's systems.

Data Transfer - The Contractor shall transfer the data daily from all business service providers and/or systems according to HUD's approved IT policies and procedures on data transfer protocol. Any such data transfer shall be coordinated with HUD to ensure adequate safeguards are taken to protect HUD's system integrity.

Hardest Hit Funds - The Contractor is required to become a participant in any State Hardest Hit Funds Program where properties securing a Secretary Held Mortgage are located if applicable.

Customer Service - The Contractor's performance reflects directly on the Department, customer service is a high priority under this contract. The contactor shall perform the highest level of customer service to HUD's clients. The Contractor shall ensure that all contacts with the public and HUD employees promote HUD's objectives under this PWS and encourage participation by industry professionals and mortgagors that will result in a high level of customer satisfaction. Customers, for the purpose of this PWS may include mortgagors, nonprofit organizations, government entities, real estate brokers and agents, title companies, attorneys, Mortgagees, Estate representatives, Borrowers family members, and HUD employees. Customer service may include, but is not limited to, answering questions; resolving complaints; providing loan information and status; referring customers to appropriate service agencies; assisting all callers in a prompt, professional and courteous manner and ensuring that Mortgagors are satisfied with their experience. Customer calls are received via the FHA Resource Center and transferred into CRM/SMART tickets and assigned to the Contractor for resolution.

Freedom of Information Act -The Contractor shall be familiar with the Freedom of Information Act (FOIA) (Title 5 U.S.C. Section 552) and the Privacy Act (5 U.S.C. 552a) and shall assist HUD in responding to requests for information. The Contractor shall forward all requests for information that are subject to FOIA or the Privacy Act to the FOIA Officer as determined by the COR. In the case of a FOIA request that involves costs to the requestor, the Contractor shall provide a cost breakdown to the COR.

Litigation -The Contractor shall not represent that it is authorized to accept service of process on behalf of HUD. However, if the Contractor receives any pleading naming HUD as a party, the Contractor shall provide the COR and the Office of General Counsel in the jurisdiction specified and any other designated HUD representative with a copy of such pleading not later than one (1) business day after receipt of the pleading. COR will provide OGC contact information at the beginning of the Contract and follow on updates as needed.

Non-Disclosure of Sensitive Information - Neither the Contractor nor any of its employees or affiliates shall disclose nor cause dissemination of any information relating to the services hereunder to any person not entitled to receive it. Failure to safeguard any sensitive information that may come to the Contractor or any person under his/her control in connection with work under this PWS, may subject the Contractor or its agents or employees to criminal liability or termination for default. The Contractor shall establish procedural and technical controls in their quality control plan to protect confidential and sensitive information. The Contractor shall establish controls to protect data from accidental or malicious alteration or destruction prior to submission to HUD's Federal Records Center. These controls must be documented in the QCP.

File Storage -The file storage facility provided by the Contractor shall meet all Federal requirements for storage of Federal records and financial assets. The files shall be in a facility that allows these files to be available to the Contractor or staff not later than twenty-four (24) hours from request. The Contractor shall safeguard all documents including to legal documents, correspondences, accounting related documents, etc. by electronic imaging and storage. The Contractor shall establish controls to protect data from accidental or malicious alteration or destruction prior to submission to HUD's Federal Records Center. These controls must be documented in the QCP. The Contractor shall maintain check stock and signature software in a secure location for which login and logout procedures are established and followed. Check stock shall be securely maintained and accounted for daily by maintaining an audit control log.

Certificate of Independence - The Contractor shall certify to the COR that each employee does not have a Secretary Held Mortgage.

Records Archiving - The Contractor shall box closed files as they become appropriate for archiving. With authorization from the Contracting Officer, boxes used for archiving files at the Federal Records Center may be purchased from approved suppliers at the government price. The archived boxes shall be delivered to the Federal Records Center in Ft. Worth, TX, in accordance with HUD Handbook 2225.6 Rev-1.

Systems Security Administrator - Not later than five (5) business days from the award date of the contract, the Contractor shall provide the COR the name and contact information for the designated Systems Security Administrator (SSA) who at a minimum has qualifications with experience in federal security documentation and certification. HUD's system clearance procedures require that the Systems Security Administrator (SSA) shall use forms provided by HUD to initiate requests for user access to SMART, other HUD systems and to request access modifications and deletions. The SSA shall certify, not later than 20 business days from the effective date of the contract and ongoing seven (7) days from new hire, that all staff has received instruction in system security issues, are familiar with the contents of the current version of HUD Handbook 2400.4 Rev-2, Information Security Program, and have completed the HUD's Computer Based Training program or Rules of Behaviors.

Deliverables A019 Systems Security Administrator Certification

1.4 Description of Services

The Contractor shall provide Secretary Held mortgage loan servicing while maintaining a high standard of customer service and maximizing recoveries on the loan portfolio. The services shall include:

· Document Custodian

· Maximizing Recoveries

· Accounting, Cash Management, Financial Analysis, and Reporting

· Occupancy Certifications

· Asset Sales-Past and Future

· Loan Servicing for Specific FHA Programs

· Loan Servicing Reports

Detailed descriptions of specific tasks are provided in Section 5 Specific Task and Deliverables

1.5 Non-Personal Services

The Government will neither supervise Contractor employees nor control the method by which the Contractor performs the required tasks. Under no circumstances shall the Government assign tasks to, or prepare work schedules for, individual Contractor employees. It shall be the responsibility of the Contractor to manage its employees and to guard against any actions that are of the nature of personal services or give the perception of personal services.

If the Contractor believes that any actions constitute, or are perceived to constitute personal services, it shall be the Contractor's responsibility to notify the Contracting Officer (CO) immediately. These services shall not be used to perform work of a policy, decision making, or management nature, i.e. inherently Government functions. All decisions relative to programs supported by the Contactor shall be the sole responsibility of the Government.

1.6 Period of Performance

The period of performance shall be for one base period of 12 months and four 12-month option periods

1.7 Place of Performance

The services to be performed under this contract shall occur at the Contractor’s facilities located within 50 miles of Oklahoma City, Oklahoma

1.8 Hours of Operation

The Contractor is responsible for providing services between the hours of 7 am to 7 pm local time in the geographical area Monday thru Friday except for Federal holidays or when the Government facility is closed due to local or national emergencies, administrative closing, or similar Government directed facility closings. Weekly hours shall not exceed a forty (40) hour work week and a typical workday will be 8 hours each day Monday through Friday. Staggered work schedules are acceptable and may be required. The Government reserves the right to change hours of operation or restrict contractor access. Work outside of these daily hours is prohibited without Contracting Officer approval. Government agencies will not be available during scheduled holidays, inclement weather, weekends, and after duty hours.

The Contractor shall at all times maintain an adequate workforce for the uninterrupted performance of all tasks defined within the contract when the Government facility is not closed for the above reasons. When hiring personnel, the Contractor shall keep in mind that the stability and continuity of the workforce is essential.

1.9 Special Qualifications

N/A

1.10 Post Award/Kickoff Conference

The Contractor shall attend any post award conference convened by the contracting activity or contract administration office in accordance with FAR Subpart 42.5. The Government intends to convene a Post Award Conference with the Contractor within ten business days after contract award. The Contracting Officer will notify the Contractor of the specific date, location, and agenda within five business days after contract award.

1.11 Status Meetings

The Contracting Officer, Contracting Officer Representative (COR) and other Government personnel, as appropriate may meet periodically with the Contractor to also review Contractor performance, requirement status, etc. At these meetings, the Contracting Officer will apprise the Contractor of how the Government views the Contractor's performance or progress of the requirement. The Contractor will apprise the Government of problems, if any, being experienced. Appropriate action shall be taken to resolve outstanding issues. These meetings shall be at no additional cost to the Government. Post Award Conference and subsequent meetings may be held via teleconference.

1.12 Contractor Travel

Prior to travel, the Contractor shall coordinate with and receive Government authorization from the COR for all travel. Reimbursement of travel costs will be in accordance with the Federal Travel Regulation and in accordance with FAR 31.205-46. The Contractor shall travel using the lower cost mode transportation commensurate with the mission requirements. When necessary to use air travel, the Contractor shall use the tourist class, economy class or similar lodging accommodations to the extent they are available and commensurate with the mission requirements. HUD will not reimburse Contractor's local travel. Local travel is defined as travel within fifty (50) miles of the Contractor's facility. All other travel will be reimbursed on a cost reimbursable basis; no profit or fee will be paid.

1.13 Transition In

The Contractor shall, upon the Contracting Officer's written notice, furnish Transition-In services as required. As a successor, the Contractor shall have sufficient personnel on board during the 120-calendar day Transition-In period to ensure a smooth transition with the incumbent Contractor. The Contractor shall provide an orderly transition of work acceptance and accomplishment such that any impact to the program is minimized. During the Transition-In period, the Contractor shall become familiar with the requirements in order to commence full performance of services by the end of the contract Transition-In period. Transition-In is not required if the successor Contractor is the incumbent Contractor.

1.14 Transition Out

To minimize any decrease in productivity and to prevent possible negative impacts on additional services, the Contractor shall have sufficient personnel on board during the 120-calendar day Transition-Out period. The incumbent Contractor shall ensure a smooth transition with the successor Contractor during the Transition-Out period, prior to completion of contractual performance. The incumbent Contractor shall aid the successor in the development of plans, procedures, and methods for the assumption of all on going work. The Contractor shall provide an orderly transition of work acceptance and accomplishment, such that full control by the successor Contractor is achieved by the end of the new contract Transition-In period.

2 Definitions and Acronyms

2.1 Definitions

221 AUTOMATIC ASSIGNMENT- An FHA insured mortgage which can be assigned to HUD under Section 221(g)(4) of the National Housing Act, one year or less following the twentieth anniversary of the date the mortgage was originally endorsed for insurance by the Department. These mortgages shall be current when assigned to HUD. The Section 235 Homeownership Program expired on October 1, 1989.

235 ASSISTED MORTGAGE - Any mortgage loan (insured by HUD under Section 235 of the National Housing Act) for which HUD previously made assistance payments to a mortgagee on behalf of the homeowner or cooperative member to pay a portion of the homeowners or cooperative members monthly payment.

235 RECAPTURE MORTGAGE - A second mortgage recorded in favor of HUD for recapture of all or part of Section 235 assistance paid on behalf of a borrower.

312 LOANS - Community Planning Development (CPD) Rehabilitation Loans (Currently no new originations)

ABANDONED CALLS - calls which enter the queue but are never answered by the contractor.

ACCELERATED NOTE - A mortgage note that must be paid in full in order to avoid foreclosure.

ACCEPTABLE QUALITY LEVEL (AQL) - The level of acceptable performance required by the Government.

ASSET CONTROL AREA (ACA) - This program provides for the discounted sale of HUD owned properties in designated revitalization areas to local government agencies or non-profit groups willing to rehabilitate the properties and resell them to income eligible borrowers who must agree to occupy the property for a defined period of time.

ASSET DISPOSITION AND MANAGEMENT SYSTEM (P260) - A business service provider used by HUD to track and manage REO properties.

ASSET SALE - Secretary Held mortgages sold in bulk to investors.

ASSIGNED TITLE II MORTGAGES - The terms Assigned Title II Mortgages, Secretary-Held, and Assignments shall be synonymous and may be used interchangeably in this contract.

ASSIGNMENTS - Loans assigned by Lenders to the Secretary of HUD for servicing.

BUSINESS SERVICE PROVIDER (BSP) - A Contractor that provides automated business processes that supports loan servicing.

BUSINESS DAY/WORKDAY - Any day other than a Saturday, a Sunday, a federal holiday, or other day on which the federal government or banking institutions by law or executive order are closed.

CALENDAR DAY- Any day of the week.

COMPROMISE OFFER/SHORT SALE - The offer by a third party to purchase a property secured by a Secretary-held mortgage for the market value that value being less than the total amount owed on the mortgage. The acceptance by HUD shall be a binding adjustment for an amount that lies somewhere between the total debt and the maximum amount that the Department can reasonably expect to receive for the secured property in the current housing market.

CONTINUITY OF OPERATIONS PLAN (COOP) - A formalized plan for the continuation of business operations in the event of a disaster.

CONTRACT - A written mutually binding legal relationship obligating the seller to furnish the supplies or services and the buyer to pay for them.

CONTRACTING OFFICER (CO) - A person with the authority to enter into, administer, and/or terminate contracts and make related determinations and findings.

CONTRACTING OFFICER REPRESENTATIVE (COR) - An employee of the U.S. Government appointed by the Contracting Officer to perform contract administration activities regarding technical issues. This individual has authority to provide technical direction to the Contractor if direction is within the scope of the contract, does not constitute a change and has no funding implications. This individual does NOT have authority to change the terms and conditions of the contract.

CONTRACTOR - The individual, partnership, corporation, or other entity, which, in addition to HUD, is the party subject to the terms and conditions of this contract.

CONTRACTOR-ACQUIRED PROPERTY - Items acquired or otherwise provided by the Contractor for performing a contract, to which the Government takes ownership. All Government-owned items shall be clearly labeled "Property of Department of Housing and Urban Development”.

CONTROLLED CORRESPONDENCE - Any correspondence that is logged into a tracking system requiring a response within certain timeframes. The correspondence is usually a FOIA or Congressional inquiry.

CUSTODIAL CARE - The managing of abandoned properties, secured by a HUD-held mortgage, which have been assigned to an M&M Contractor to secure, maintain yard, and winterize, until title of the property can be vested in HUD.

DAY - A calendar day, unless otherwise specified.

DEFECTIVE SERVICE - A service output that does not meet the standard of performance associated with the Performance Work Statement.

DELIVERABLE - Anything that can be physically delivered but may include non-manufactured things such as meeting minutes or reports.

DIRECT PAYMENT - Regular monthly payments and line of credit payments that are paid directly to the mortgagor or the mortgagors banking account.

DUE and PAYABLE - A mortgage that must be paid in order to avoid foreclosure.

ELECTRONIC COURSES ON LOSS MITIGATION AND SERVICING (ECLASS) - A business service provider that provides FHA lenders, housing counseling agencies, HUD, and other non-profit organizations with web-based "Servicing and Loss Mitigation" training and notifications to various related conferences.

ELECTRONIC AND INFORMATION TECHNOLOGY (EIT) - Has the same meaning as "information technology" except EIT also includes any equipment or interconnected system or subsystem of equipment that is used in the creation, conversion, or duplication of data or information. The term EIT, includes, but is not limited to, telecommunication products (such as telephones), information kiosks and transaction machines, worldwide websites, multimedia, and office equipment (such as copiers and fax machines).

ELECTRONIC FUNDS TRANSFER (EFT) - Checking or savings accounts set up with a financial institution by the borrower to receive payments from the servicing lender electronically. The Contractor shall make this option available to those borrowers who wish to use this method of payment.

EMERGENCY HOMEOWNER LOAN PROGRAM (EHLP) - The Dodd-Frank Wall Street Reform and Consumer Protection Act provided $1 billion to the U.S. Department of Housing and Urban Development (HUD) to implement the Emergency Homeowners' Loan Program (EHLP). The program offers a declining balance, deferred payment loan (non-recourse, subordinate loan with zero interest) for up to $50,000 to assist eligible homeowners with payments of arrearages.

ESCROW ACCOUNTS - Non-interest-bearing bank accounts established for the payment of property taxes and/or insurance.

EXTENSIONS AND VARIANCE PROCESSING (EVARS) - A business service provider that provides FHA lenders an interactive automate process available through the Internet that gives approved FHA lenders real-time opportunity for automated request, review, approval and/or denial of extensions and variances related to various loan programs

FHA CONNECTION - HUDs interactive Internet system providing approved Federal Housing Administration (FHA) lenders

FERRELL MORTGAGE - PMMs created as a result of a court decision, Ferrell v. United States HUD, 186 F.3d 805, which requires HUD to sell acquired properties to certain mortgagors and finance the purchase of these properties. In many instances, HUD holds second mortgages associated with this financing.

FINANCIAL DATA INFORMATION - Financial data information obtained when a caller calls about are delinquent mortgage, e.g. all fixed monthly expenses and income in a format acceptable to HUD according to HUD Handbook. Information is not disclosable to the caller.

FORBEARANCE AGREEMENT - Any agreement, whether formal or informal, whether or not written, pursuant to which HUD has agreed to forbear from enforcing certain provisions of a mortgage or mortgage note.

FORCE MAJEURE - Specific events that are beyond the control and without the fault or negligence of the Contractor. Examples of these events are (1) acts of God or of the public enemy, (2) acts of the Government in either its sovereign or contractual capacity, (3) fires, (4) floods, (5) epidemics, (6) quarantine restrictions, (7) strikes, (8) freight embargoes, and (9) unusually severe weather.

FORECLOSURE AGENT - A contract attorney, a Department of Justice contract attorney, a Department of Justice attorney, or a Foreclosure Commissioner designated under the Single-Family Mortgage Foreclosure Act who carries out the foreclosure actions.

GOOD NEIGHBOR NEXT DOOR (GNND) - As part of its commitment to preserve neighborhoods, HUD sells foreclosed homes in designated revitalization areas at a 50% discount to police offices, teachers, fire fighters and emergency medical personnel. Program participants must agree to occupy the subject properties for a period of three years. Program requirements call for second mortgages on these loans to secure compliance with the occupancy requirement.

GOVERNMENT FURNISHED PROPERTY (GFP) - Government-furnished property means property in the possession of, or directly acquired by, the Government and subsequently furnished to the Contractor for performance of a contract. Government-furnished property includes, but is not limited to, spares and property furnished for repair, maintenance, overhaul, or modification. Government-furnished property also includes contractor-acquired property if the contractor-acquired property is a deliverable under a cost contract when accepted by the Government for continued use under the contract.

HARDEST HIT FUND (HHF) - Hardest Hit Fund programs in 18 states and the District of Columbia are designed to aid struggling homeowners through modification, mortgage payment assistance, and transition assistance programs.

HOPE FOR HOMEOWNERS (H4H)- This program was introduced as part of The Housing and Economic Recovery Act of 2008 (HERA). Under this program, a borrower facing difficulty with his or her mortgage will be eligible to refinance into an affordable FHA-insured mortgage.

INDUSTRY STANDARDS - Generally accepted business practices within the Industries of Real Estate, Lending, and Management of Assets.

INITIAL 36-MONTH PERIOD - For Assigned Title II Mortgage Loans, other than PMM loans and 221 Mortgage loans, the period commencing on the date of assignment acceptance and ending at the conclusion of…