Attachment 0010 - FSM Tasks (Informational Purposes Only).pdf

Attachment 0010 - Field Service Management (FSM) Tasks

5 Specific Tasks

5.1 GENERAL REQUIREMENTS

Property management responsibilities under this PWS include:

Initial inspections to confirm whether property meets conveyance conditions;

Preservation of property from conveyance to sale;

Maintenance and preparation of properties intended for sale;

Management of rental properties;

Management and maintenance of properties in the custody of, but not owned by HUD

Regardless of the type of acquisition or the property management services required, the Contractor shall ensure all properties are clean, safe, secure and sanitary and preserves property value.

5.2 PROPERTY MANAGEMENT

5.2.1 Pre-Conveyance

5.2.1.1 Inspections

The Contractor shall perform pre-conveyance inspections as described below upon notification through automatic assignment via a work notification in P260 or by the COR.

Performance Standards

a) Standard: 100% performance of four (4) types of pre-conveyance inspections when notified property is assigned.

AQL: 95%

5.2.1.1.1 Pre-Conveyance Inspection

The Contractor shall perform four types of pre-conveyance inspections when notified property is assigned: 1) Overallowable Inspection; 2) Surchargeable Damage Inspection; 3) Pre-Assignment Inspection; and 4) Occupied Conveyance Inspection.

5.2.1.1.2 Overallowable Inspection

No later than two (2) calendar days after notification of a request from the MCM to perform an inspection for a Mortgagee’s requests for Preservation & Protection Overallowables expenses, the Contractor shall perform an Overallowable Inspection and submit the results to the MCM. The Contractor shall perform an on-site inspection to verify the necessity, cost and reasonableness of a Mortgagees Overallowables requests using the information submitted with the request. At the completion of the inspection, the Contractor shall provide the MCM with a P&P cost estimate using the HUD provided Cost Estimating Tool to prepare the estimate; a determination of whether the expenses are justified; and a recommendation to either approve the requests for the amount requested, approve it for a different amount, or reject the request in its entirety and the basis for that determination.

5.2.1.1.3 Surchargeable Damage Inspection

No later than two (2) calendar days after notification of a request from the MCM to perform an inspection for a Mortgagee’s request for surchargeable damage, the Contractor shall perform a Surchargeable Damage Inspection and submit the results to the MCM via P260. The Contractor shall perform an on-site inspection to determine whether the damage is surchargeable and the proposed cost is reasonable using the information submitted with the Mortgagees surchargeable request. At the completion of the inspection, the Contractor shall provide the MCM with a surchargeable damage cost estimate using the HUD provided Cost Estimating Tool application to prepare the estimate; a determination of whether the expenses are surchargeable; and a recommendation to either approve the requests as is; approve it for a different amount; or reject the request in its entirety and the basis for the determination.

5.2.1.1.4 Pre-Assignment Inspection

No later than two (2) calendar days after notification of a request from the MCM or HUD to perform an inspection for a mortgagee’s request for an FHA insurance claim, the Contractor shall schedule an inspection to determine property condition. The inspection shall be completed as soon as possible but no later than seven (7) calendar days after the MCMs request. The purpose of this inspection is to determine whether the property is in compliance with HUD regulatory conveyance and/or assignment requirements and published guidance. As part of this inspection, the Contractor is required to report inspection results on FSM Property Inspection Form (Attachment 7) and upload this document with adequate photo support to the case record in P260 or provide this information to HUD designated personnel.

5.2.1.1.5 Occupied Conveyance Inspection

No later than two (2) calendar days after the MCMs request to have an inspection performed, the Contractor shall schedule an inspection to determine habitability. The inspection shall be completed as soon as possible but no later than seven (7) calendar days after the MCMs request. The purpose of this inspection is to determine whether the property contains hazardous materials and is in compliance with HUD regulatory requirements. See 24 C.F.R. 203.670 through 203.681.

Properties Conveyed Occupied without Approval

If a Mortgagee conveys a property occupied without prior approval or contrary to regulatory requirements, the FSM on their initial inspection will determine if the occupancy is adverse or non-adverse. The Contractor must notify their COR and the MCM within two (2) business days, and then await further instruction from their COR. The Contractor may be required to facilitate a lease agreement or eviction in accordance with local laws and HUD Handbook 4000.1.

5.2.2 Acquisition (Post-Conveyance)

5.2.2.1 HUD Property Inspection

The Contractor shall complete a comprehensive (thorough and complete) property inspection to include conveyance condition items, initial inspection items, systems check, Lead-Based Paint (LBP) considerations and any other items HUD requires. Where appropriate, as part of this inspection, the Contractor shall physically verify that all approved conveyance activities, such as approved overallowables, were performed completely and properly. From the results of this thorough inspection, the Contractor shall complete the HUD Property Inspection Report (HPIR) (see Attachment 6) that includes three (3) parts: Part I - Property Conveyance Condition Report; Part II - Initial Inspection Report; and Part III - Property Condition Report (PCR). The Contractor shall upload Part I and Part II of the completed HPIR data into P260 within two (2) calendar days of assignment. The Contractor shall complete any additional data field requirements in P260 to generate a Property Condition Report (PCR) within five (5) calendar days of completion of Parts I and II of the HPIR. The Contractor shall be responsible for ensuring that all required data fields in the HPIR and the generated PCR are complete and accurate.

Performance Standards

a) Standard: 100% of all requirements outlined in the referenced PWS sections shall be completed within seven (7) calendar days of assignment. 100% HUD Property Inspections and supporting documentation are submitted timely, complete, and legible.

AQL: 95%

5.2.2.1.1 Part I of the HPIR: Conveyance Condition

Part I of the HPIR defines what is required for a property to be in conveyance condition at the time it was conveyed to HUD. The Contractor shall determine if the property is in conveyance condition, as defined in Part I by inspecting the property components identified in Part I of the report and answering the questions related to their condition. The Contractor shall review the over-allowable data in P260 and related physical documentation as provided by the MCM and/or HUD personnel and provide a professional opinion if the mortgagee satisfactorily performed services. This process requires the Contractor to identify damage to basic property components and provide cost estimates to repair damage or replace missing components for habitability and occupancy. Damages caused by mortgagee neglect or work not completed by the mortgagee shall be brought to the attention of the COR and MCM (accurate cost estimates and statements on the HPIR). The COR shall decide if a demand should be issued to the mortgagee or if re-conveyance is warranted.

If the property has damaged or missing basic components, the Contractor shall estimate the cost to replace or repair the missing or damaged components, using the cost estimating tool. The cost estimate is to be included in Part I of the HPIR. Within two (2) calendar days of assignment of the property, the Contractor shall upload Part I of the HPIR, the cost estimates, and any other relevant information, including pictures, into P260 for review by the MCM. The Contractor shall provide its professional opinion if a mortgagee insurance claim should have been filed and further research is warranted, i.e.

missing major components like kitchen cabinets, AC units and vandalism.

Upon receipt of the HPIR, the MCM shall make a conveyance decision for damaged properties. The MCM can re-convey properties that are not in conveyance condition back to the Mortgagees or accept the conveyance and issue a demand for the costs to repair the damages. In order to make this determination, the MCM shall generate its own cost estimate and compare it to the cost estimate the Contractor submitted on the HPIR. If there are differences greater than a +/- 10% between the Contractors estimate and the MCM estimate, the MCM shall make the final determination of the costs to repair the damages. If the MCM decides not to re-convey the property, it will proceed to follow through with the collection process.

5.2.2.1.2 Part II of the HPIR

Initial Inspection Part II of the HPIR details property conditions that may be found at the property during the inspection beyond those conditions identified to determine conveyance condition. The Contractor shall complete this part of the HPIR to determine compliance with HUD Minimum Property Requirements (MPR). The Contractor shall be knowledgeable of MPR requirements as described in the HUD Handbook 4000.1 and subsequent policy guidance. The Contractor shall fully document with photographs all appliances (whether present or missing), well components, accessible copper pipes and wiring, or any other item that may be the target of vandalism or theft. This documentation will be used to assist HUD when determining potential vandalism or theft credits.

If the inspection identifies any health and safety conditions, or there is a need for emergency repairs, the Contractor shall remedy any health and safety conditions and make any emergency repairs within one

(1) calendar day of the inspection. The contractor shall update P260 with the corresponding work orders and before and after photographs within two (2) calendar days of completion of the remedial action. The Contractors responsibility to remedy Health and Safety Hazards and Emergency Repairs remains until the property closes and HUD is no longer responsible for its maintenance. The remedy of Health and Safety Hazards is a Contractor Expense. Examples of Health and Safety Hazards include but are not limited to faulty or missing stairs or handrails as required by local ordinance, pools and spas not in compliance with local ordinance, trip hazards, limbs or dead trees with a potential of falling, chemicals, dead animals and feces. The cost to install a pool or spa cover shall be a Pass Through Expense when pre-approved by the COR.

The Contractor shall upload the completed Part II of the HPIR into P260.

5.2.2.1.3 Part III of the HPIR

Property Condition Report - Part III of the HPIR is a complete systems functionality test to ascertain the functionality of all heating, cooling, plumbing, gas/electrical systems, appliances, and septic/well systems. The Contractor must disclose the existence of any transferable warranties. Part III of the HPIR shall also include any known outstanding code violations, pending litigation, demolition orders, and other legal actions that may impact the property. In preparing this portion of the HPIR, if the utilities are not activated, the Contractor shall use alternative means to conduct the systems and appliance functionality. The Contractor shall complete the required data fields in P260 for the PCR systems functionality and other items. Visual inspections alone are not sufficient and do not satisfy the requirements of the systems functionality test.

No later than twenty-four (24) hours after the Contractor, a Subcontractor, or any Management Official of any of the foregoing acquires knowledge that renders the contents of a previously prepared Part III of the HPIR, inaccurate or incomplete, the Contractor shall update the HPIR, Part III, and place the update into P260 with the most current information.

5.2.2.2 Initial Securing

Concurrent with the completion of Parts I and II of the HPIR, the Contractor shall ensure that all properties conveyed to HUD are properly secured against unauthorized entry in accordance with instructions outlined in HUD Handbook 4000.1 and any subsequent policy directives from HUD or the COR. The Contractor shall perform the initial securing services and routine inspections in accordance to C.5.2.3.2 for those properties that do not meet conveyance condition unless the Contractor is notified by the MCM via P260 that re-conveyance is complete. The Contractor shall keep an itemized record of all charges incurred for activities performed on properties that are re-conveyed and provide this information to the COR upon request.

5.2.2.3 Initial Clean-out Services

The Contractor shall perform initial services as discussed below. Initial services shall be completed within five (5) calendar days after completion of Parts I and II of the HPIR.

Disposal of all Debris, Refuse, and Personal Property

The Contractor shall remove and properly dispose of all debris, refuse and personal property from both the land and structures at HUD-Owned Properties. All costs associated with removal and disposal of the first 10 cubic yards (CY)of debris, refuse and personal property (or any combination thereof) is a Contractor Expense. Verifiable debris (not to include grass cutting, tree/bush trimming and foliage) submitted with date stamped photographs in excess of 10 (CY) and discovered at initial inspections shall be an allowable Pass through Expense and submitted in accordance with the HUD’s Financial Control Manual In some states, an eviction of personal property may be required. If required, the Contractor shall initiate the action with COR approval. Legal fees associated with evictions will be an allowable Pass Through Expense.

Post Emergency Signage

The Contractor shall post an emergency contact sign on the property providing a name and toll free, 24-hour phone contact for emergency response. Signage must include additional information as determined by HUD.

Repair Broken Windows and Doors

The Contractor shall repair or replace all broken windows and doors unless otherwise directed by the COR. If a property is conveyed to HUD with boarded doors or windows; the Contractor shall remove the boarding, repair/replace all broken windows or doors. Repairs must restore to the original condition and be in a manner that conforms to the esthetics of the property. All doors and the first four (4) broken or missing windows will be repaired/replaced as a Contractor Expense. The contractor shall be allowed to submit a Pass-Through Expense for all windows exceeding four (4) if accompanied with COR approval.

Pass Through Expenses will only be allowed on damages discovered at initial inspection.

Ensure Proper Access

In accordance with HUD guidance, the Contractor shall ensure that properties are re-keyed at assignment with a locking mechanism that provides access to HUD employees and Contractors. Upon assignment to an Asset Manager (AM), the Contractor shall ensure the AM and Lead Evaluation Contractor (LEC) has access to the property. The Contractor shall maintain an approved system to change key codes every six (6) months in efforts to thwart vandalism. No less than six keys shall be provided to the COR for each key code utilized.

Winterization

The Contractor shall perform winterization of all operating systems in accordance with the requirements of HUD Handbook 4000.1 or any subsequent policy directives. Winterizations shall be performed on all properties from October 1 through March 31 unless otherwise determined by the COR.

Prevent Further Moisture Damage

Contractor must stop active leaks that may cause deterioration of the property or pose an imminent health or safety hazard. This includes ensuring proper drainage is maintained around the perimeter of the property.

Install Sign-In Sheets

Contractor must place and maintain a sign-in sheet in the property. A separate sign in sheet will be required in each unit of a multi-unit property. The Contractor and all Subcontractors and workmen shall sign-in each time they enter the property. Sign-in sheets must be maintained in a professional manner and replaced when full, with copies of completed sheets being uploaded into P260.

Notifications

Within seven (7) calendar days the Contractor shall notify the local police and local jurisdictions as related to property registration ordinances where registration of vacant properties is required, and any other appropriate parties of HUD’s ownership of the property and include contact information for delivery of notices and invoices.

Utilities (Initial services)

Immediately upon assignment, the Contractor shall notify the local utilities of HUD’s ownership of a property and shall order a final utility bill to determine if there are unpaid utility charges for the period prior to HUD’s acquisition. The Contractor shall ensure that HUD only pays those costs it is legally obligated to pay and in accordance with ML 2013-18, HUD Handbook 4000.1 and any subsequent policy directive.

Utility Liens

In areas where under local laws a utility lien was not wiped out at the mortgagee’s foreclosure, the Contractor shall pay the outstanding utility bill for the period prior to acquisition by HUD. HUD will only reimburse, as a pass-through expense, those payments made to satisfy utility liens incurred prior to acquisition.

Post-Acquisition Utility Charges

In accordance to published guidance (currently, ML2010-18 and all current updates), HUD Handbook

4000.1 and any subsequent policy directive, the Contractor shall turn on the utilities for properties in areas where they determine it is necessary to have the utilities remain on to preserve the property from freeze or moisture damage. Unless otherwise directed by the COR, the Contractor shall also have utilities on in condominiums, townhouses or other attached units to prevent freeze damage during the time period of October 1 through March 31, or as required by local, state, or Association requirements.

The Contractor shall pay without reimbursement by HUD all utility charges (which includes ALL associated fees and base charges by the utility company)* from the date of acquisition or vacancy (whichever is later) through the closing or within the established time period, unless directed as to otherwise by HUD. The Contractor shall be liable for any damages or losses incurred due to a failure to perform these requirements. *Please note: Various municipalities may include but are not limited to , additional fees such as trash, water and sewage, etc. as part of the utility bill. Contractors are responsible for ALL fees on the utility bill.

Pre-existing Liens at Acquisition

The Contractor shall notify the COR of any identified liens incurred prior to the acquisition of a property by HUD. As instructed by the COR, the Contractor shall satisfy the pre-existing lien. HUD will reimburse, as a pass-through expense, any payment made at the instruction of the COR to satisfy pre-existing liens that were incurred prior to acquisition.

Purchaser Testing

The Contractor shall allow purchasers under contract the opportunity to activate and deactivate utilities for a period of 24 hours for the purpose of performing a system check prior to purchase. The Contractor shall not charge the purchaser a fee for the Contractor's efforts to facilitate this process. However, the purchaser is responsible for the actual costs to activate, deactivate and usage. The Contractor may require that the potential purchaser deposit an amount sufficient to cover these costs. The deposit should cover the known activation fees and an anticipated fee based on projected usage. All unused funds must be returned to the buyer within a reasonable amount of time (i.e. within 7 calendar days after the utility bill is received). The FSM shall provide an itemized invoice to justify the amount of funds actually spent performing these services for the potential purchaser. The Contractor will be responsible for re-winterizing the property within 24 hours after they are notified or become aware of the review by the potential purchaser. This will be a Contractor Expense.

Occupied Properties

In instances where HUD does, as a matter of policy, agree that utilities be activated in HUD’s name and provided that HUD-owned properties are occupied, the Contractor, with COR approval, will be reimbursed the utility costs as a pass-through expense for the period of occupancy.

Performance Standards

a) Standard: 100% of Asset Manager Initial Inspections reviewed where property met ready to list conditions.

AQL: 95%

5.2.2.3.1 Health and Safety Hazards and Emergency Repairs

The Contractor shall remedy any health and safety conditions and make any emergency repairs within one (1) calendar day of notification. The contractor shall update P260 with the corresponding work orders and before and after photographs within two (2) calendar days of completion of the remedial action.

Performance Standards

a) Standard: 100% of identified imminent health and safety hazards are abated within 24 hours of discovery or notification.

AQL: 95%

5.2.3 PROPERTY MAINTENANCE

The Contractor shall maintain properties in Ready to Show Condition. The Contractor shall be liable for damages to all acquired properties due to failure to inspect or maintain property in ready to show condition or secure property or other act, neglect, failure, or misconduct of the Contractor, a Subcontractor, or any Management Official of any of the foregoing. The Contractor shall indemnify HUD for losses due to any act, neglect, failure, or misconduct of the Contractor, a Subcontractor, or any Management Official of any of the foregoing. The Contractor shall not be held liable for casualty damage as long as, before and after such casualty, the Contractor takes immediate and reasonable action to protect the property. After a property is promoted to an Asset Manager, any changes that affect the condition or may have an impact on the sale must be sent to the Asset Manager via an email from P260 on the day of discovery. Uploading of a document or adding a case note does not constitute proper notification to the Asset Manager. Any financial loss or claim against HUD, due to failure to disclose issues may be considered a Contractor Expense.

Performance Standards

a) Standard: 100% of properties are maintained in a clean, safe, sanitary, “Ready to Show" condition.

AQL: 95%

5.2.3.1 Ready to Show Condition

The PWS allows seven (7) calendar days to get the property in Ready to Show Condition and promote to 1C. The Contractor shall ensure that the property is in Ready to Show Condition by this time and that it remains in ready to show condition until sold, the property closes, and HUD is no longer responsible for its maintenance.

5.2.3.2 Routine Inspections

The Contractor shall routinely inspect and take all actions necessary to ensure that HUD properties are maintained in Ready to Show Condition. The Contractor shall inspect the property every two weeks, where intervals between inspections shall be at least ten (10) calendar days and not more than fourteen

(14) calendar days. Property inspections performed in accordance to this schedule will begin on day eight (8) of property assignment.

The Contractor is required to conduct routine inspections and report inspection results on FSM Property Inspection Form (Attachment 7). Notwithstanding the allowance of one day to upload documents generally, as noted elsewhere, the routine inspection reports must be uploaded within the 10th and 14th day interval. The contractor will receive credit for performing an inspection only if they perform and report inspection results, upload completed FSM Property Inspection Form with photo documentation as required by HUD, completely populate all required fields in P260, and upload a copy of the sign-in sheet clearly identifying the FSM inspector, date, and purpose of the visit into P260 during the 10th and 14th day weekly inspection intervals.

The Contractor, as part of their property management plan documentation, shall submit an itemized account of the services performed for property management. The failure of the Contractor to perform (1) any routine inspection, and/or (2) the proper upload of required documentation within the required timeframe will be considered a complete failure by the Contractor in performing the required property inspection.

Performance Standards

a) Standard: 100% of properties are routinely inspected timely to show they are maintained in a clean, safe, sanitary, “Ready to Show" condition.

AQL: 95%

Vacant Lots

Vacant lots are to be maintained at all times in a manner that result in properties that are clean, safe and sanitary. Within two (2) calendar days after notification of assignment the Contractor shall inspect the vacant lot and perform initial lawn maintenance service outlined in the Contractor’s Property Management Plan. The yard must be free of trash and debris; accumulated leaves and holes must be covered or filled. The grass must be cut and bushes trimmed in a professional manner. The property must remain clear of any code violations or encumbrance. The Contractor shall upload Part I and Part II of the completed HPIR data into P260 within two (2) calendar days after assignment.

The Contractor shall inspect the property every two weeks, where intervals between inspections shall be at least ten (10) calendar days and not more than fourteen (14) calendar days. Property inspections performed in accordance to this schedule will begin on day eight (8) after property assignment.

The Contractor is required to conduct routine inspections and report inspection results on FSM Property

Inspection Form (Attachment 7). Notwithstanding the allowance of one day to upload documents generally, as noted elsewhere, the routine inspection reports must be uploaded within the 10th and 14th day interval. The contractor will receive credit for performing an inspection if they perform and report inspection results, upload completed FSM Property Inspection Form with photo documentation as required by HUD, and completely populate all required fields in P260 during the 10th and 14th day weekly inspection intervals.

Evictions

The Contractor shall initiate and administer eviction actions consistent with state and local laws after having obtained COR approval. Legal expenses associated with eviction actions, including relocation payments to tenants in those jurisdictions where HUD, as a matter of policy has determined to pay relocation, will be reimbursed on a pass-through basis when approved in advance by the COR. The Contractor shall not incur any legal expenses for which reimbursement is expected without prior COR approval. The Contractor shall conduct evictions in accordance with the guidance in HUD Handbook

4000.1 or any subsequent policy guidance.

Demolitions

The Contractor shall identify properties that are eligible for demolition. At the direction of the COR, the Contractor shall obtain bids, select, contract for and oversee the demolition of property improvements, removal of debris and cleaning of the vacant lot. HUD will reimburse the costs of approved demolitions as a pass-through expense. The Contractor shall not perform any Lead-Based Paint inspections for properties that are approved for demolition.

Historic Preservation Requirements

Prior to demolition of the improvements on any HUD-owned property, the Contractor shall comply with Section 106 of the National Historic Preservation Act (NHPA) (16 USC 470f) and the implementing regulation for Section 106 at 36 CFR Part 800. Compliance includes determining if the property is on the National Register of Historic Places, and if it is not listed on this register, consulting with the State or Tribal Historic Preservation Officer to determine whether the property is eligible for inclusion on the register. If the property is on the register or is eligible for inclusion on the register, the Contractor shall consult with the State or Tribal Historic Preservation Officer and other consulting parties to resolve the adverse effects of demolition and shall prepare any required documentation or memorandum of agreement for review and execution by HUD. The Contractor shall include in P260 all actions taken with respect to compliance with NHPA.

ONAP Properties

Properties located on Indian or tribal lands and acquired as a result of foreclosure of a loan guaranteed under the Section 184 Loan Guarantee for Indian Housing Program may have specialized property management requirements. The COR will provide the Contractor with written instruction to the extent the property management requirements are not applicable, or additional property management tasks are required. apply.

5.2.4 ENVIRONMENTAL COMPLIANCE

The Contractor shall manage HUD properties in compliance with applicable environmental laws and regulations.

Lead-Based Paint - Lead-Based Paint Hazard Reduction Act of 1992 (Title X of the Housing and Community Development Act of 1992) and the lead-based paint regulations (the Lead Safe Housing Rule) at 24 CFR Part 35, Subpart F, eliminate as far as practicable lead-based paint hazards in single-family properties built before 1978 and sold with FHA-insured mortgages. For properties that were built prior to 1978 and are not being sold with FHA-insured mortgages, the Contractor shall not obtain a LBP inspection and only disclose that there is chipping and peeling paint if it is found.

Lead-Based Paint Work Orders - A lead-based paint inspection work order will be generated in P260 by the AM for properties that were built prior to 1978 and are being sold with FHA-insurance. When a work order is generated in P260, the Contractor shall verify that the year built is prior to 1978 using public records or other credible means. The Contractor shall order a lead-based paint inspection consistent with the requirements and have necessary stabilization performed for properties that are being sold FHA-insured only if the cost of the stabilization does not exceed $4,000, consistent with Attachment 3. For stabilization cost exceeding $4,000, the Contractor shall notify the COR and only proceed with the stabilization if directed by the COR.

Compliance Requirements - Upon receipt of the work order, and prior to commencing work, the Contractor shall, using its own records, verify that the year of construction entered into P260 is accurate.

When discrepancies are noted, the Contractor shall immediately notify the AM in P260 asking for clarification. Upon receipt of a clarified work order, the Contractor shall proceed within one (1) day to order the inspection.

Lead-Based Paint Inspections – Lead-Based Paint inspections must be ordered from HUD’s Lead Evaluation Contractor (LEC). For all properties where an inspection has been requested, the Contractor shall comply with the requirements discussed in this PWS and in Attachment 3. Within one (1) day of receipt of the inspection and stabilization report, the Contractor shall upload the information in P260 for use by the AM to prepare the necessary disclosures. Prior to any stabilization, the Contractor must ensure an updated Lead-Based Paint Addendum has been signed by the purchaser and that they intend to go forward with the purchase. When the cost of the stabilization exceeds $4,000, the Contractor shall notify the AM via P260. For stabilization cost exceeding $4,000, the Contractor shall notify the COR and only proceed with the stabilization if directed by the COR.

Stabilization and Clearance - The Contractor shall fully comply with HUD’s policy for elimination of lead-based paint hazards in HUD homes built before 1978, as described HUD Handbook 4000.1, Elimination of Lead-Based Paint Hazards in HUD Owned Single Family Properties, and in accordance with the procedures described in Attachment 3.

Costs - As further described in Attachment 3, costs for inspection, visual assessment, paint stabilization and clearance of lead-based paint or lead-based paint hazards will be reimbursable by HUD as an allowable pass-through expense. HUD shall only pay for the first clearance test. Subsequent clearance tests shall be a contractor’s expense payable to HUD in a manner determined by the Contracting Officer.

Stabilization cost exceeding $4,000 must have prior approval by the COR. The Contractor shall receive, review, inspect, verify, and submit for approval the invoices for the services rendered by the LEC. Upon receipt of a monthly invoice from the LEC, the FSM Contractor shall, within three (3) business days prepare a transmittal in P260 and submit to the HOC for processing and payment. The FSM Contractor shall include a signed certification with each transmittal, stating that an acceptable lead-based paint inspection was completed on each property contained in the transmittal and the date LEC inspection was performed. Payment of the LEC transmittal will be made by HUD directly to the LEC contractor.

Asset Control Area (ACA) Properties - The Contractor shall not be responsible for lead-based paint inspections, stabilization or clearance for properties sold under an Asset Control Area Agreement.

Mold - The Contractor shall remedy at their expense small amounts of mold not to exceed twenty-five

(25) square feet in any single area. For larger areas the Contractor shall notify the COR of any property with obvious evidence of mold or organic growth that, in the opinion of the Contractor, poses a potential health or safety hazard or inhibits marketing. At the direction of the COR, the Contractor may be required to provide estimates for removal, mold testing and abatement or to provide property access to a Contractor. All associated costs of testing or abatement pre-approved by the COR will be reimbursed as a pass-through expense.

Other Environmental Hazards - Within two (2) business days of completion of the HPIR, the Contractor shall conduct a search of information in its possession, including but not limited to, information obtained from the HUD Property Inspection Report, Property Condition Report, appraisal, BPO and any other available information to determine if environmental hazards exists at the property.

Examples of environmental hazards include, but are not limited to, the presence of noxious fumes, radiation, underground storage tanks and chemical spills as well as the hazardous substances. If the search reveals any record of environmental hazards at the property, the Contractor shall immediately notify the COR and shall disclose that information in P260 and on the HUD Property Inspection Report.

At the direction of the COR, the Contractor may be required to provide environmental testing and remediation or work with a Certified Environmental Contractor. All costs of testing and remediation shall pre-approved by the COR and will be reimbursed as a pass-through expense. The Contractor shall not offer a property with known environmental hazards for lease until so authorized in writing by the COR. If, after occupancy of a leased property, the search reveals a record of environmental hazards, the lease agreement will be amended to include notice of the hazards. The Contractor shall obtain written approval of the lease provisions from the COR and shall consult with the COR on whether termination of the lease or discontinuation of the occupancy is warranted.

CERCLA Compliance - Under Section 120(h) of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) (42 USC 9620(h)), HUD may not transfer title to a property on which any hazardous substance was stored for one year or more or known to have been released or disposed of until the contamination has been remediated. The meanings of the terms hazardous substances, storage, release and disposal are defined in the implementing regulations for section 9620(h)(l) at 40 CFR Part 373.

Lease Restriction - The Contractor shall not knowingly enter into a lease for a property with a record of hazardous substances. If, after occupancy, the search reveals a record of the storage for one year or more, release, or disposal of hazardous substances at the property, the lease agreement must be amended. The Contractor shall obtain the prior written approval of the COR for these lease restrictions and shall consult with the COR on whether termination of the lease or discontinuation of the occupancy is warranted.

5.2.5 TERMITES AND WOOD DESTROYING ORGANISMS

The Contractor shall order a Wood Destroying Organisms (WDO) inspection within one (1) business day of receipt of WDO work order request issued by the AM via P260 and upload to P260 the WDO inspection report within one (1) day of receipt of the completed inspection for properties that meet one or more of the following conditions: Properties mandated by the state or local jurisdiction; The property is under contract with FHA mortgage insurance and the property is located in a FHA designated Termite Probability Zones (TPZ); or COR approval is granted to perform the inspection as customary seller concessions for the area. Costs for the WDO inspection shall be a Pass Through Expense and determined by COR Blanket Approval.

Clearance

For properties, which require a WDO inspection, the AM may be required to provide a current termite/WDO clearance letter at closing if requested by the purchaser’s lender. In some areas this will require a re-inspection no earlier than thirty (30) calendar days prior to closing. For these properties, the Contractor shall conduct an additional WDO at the AMs direction. The additional WDO inspection will be reimbursable by HUD as an allowable pass-through expense as long as the charge is reasonable and customary.

Active Infestation

All WDO inspections must be completed by a pest control officer. The inspection report, including any required treatment and/ or repairs necessitated by the infestation, must also be uploaded in P260. If a property is sold using FHA insurance and the WDO inspection indicates active infestation and the cost of the treatment and any necessary repairs is less than $1,000, the Contractor shall order the treatment/repair within five (5) calendar days of WDO inspection. For properties that are sold with FHA insurance and the cost of treatment and repair exceeds $1,000, Contractor shall notify the AM and COR of the cost of required treatment and any repairs necessitated by the infestation. The Contractor shall order/complete the treatment and any necessary repairs only after receiving approval from the COR.

For properties where inspections are mandated by the state or local jurisdiction or were approved by the COR and the inspections results shows active infestation, the Contractor shall notify the AM and COR, and order/complete the treatment and any necessary repairs after receiving COR approval.

The Contractor shall inspect the work (treatment and repairs) after completion and ensure that the person or entity that completed the inspection does not perform the treatment and/or any necessary repairs. The cost of approved treatment and repairs will be reimbursed as a pass-through expense. The Contractor shall not submit for reimbursement any fee determined not in compliance with the policies defined in this section.

Performance Standards

a) Standard: 100% of Environmental Inspections submitted timely, complete, legible, and in compliance with applicable environmental laws and regulations.

5.2.6 CUSTODIAL PROPERTIES

Custodial properties are vacant properties secured by a secretary-held mortgage, including a HECM. By virtue of its security interest, HUD has certain rights and responsibilities to ensure that the property is preserved and protected. HUD does not hold title to custodial properties and therefore they are not offered for sale. Custodial properties will be assigned to the Contractor either through HUD’s case management system (P260) or through the COR. Within two (2) calendar days of notification of assignment the Contractor shall secure the property in accordance with Section 5.2.2.2, perform initial services in accordance with Section 5.2.2.3 to the extent that such requirements can be met without constituting an illegal trespass, and attach a completed copy of Part I Property Conveyance Condition Report of the HUD Property Inspection Report as an attachment in P260. The contractor shall leave the property in a step 1. If the property is occupied, the Contractor shall immediately notify the COR and await instructions prior to taking further action.

The Contractor shall inspect the property every two weeks, where intervals between inspections shall be at least ten (10) calendar days and not more than fourteen (14) calendar days. Property inspections performed in accordance to this schedule will begin on day eight (8) of property assignment.

The Contractor is required to conduct routine inspections and report inspection results on FSM Property Inspection Form (Attachment 7). Notwithstanding the allowance of one day to upload documents generally, as noted elsewhere, the routine inspection reports must be uploaded within the 10th and 14th day interval. The contractor will receive credit for performing an inspection if they perform and report inspection results, upload completed FSM Property Inspection Form with photo documentation as required by HUD, and completely populate all required fields in P260 during the 10th and 14th day weekly inspection intervals.

The Contractor shall maintain vacant custodial properties in accordance with the Contractors Property Management Plan and at the direction of the COR, subject to the following conditions: Notifications

The Contractor shall not be required to provide notifications of ownership to police, utility companies, HOAs, and non-tax assessment entities.

Ready to Show Condition

The Contractor shall not be required to keep the interior of the property clean and in ready to show as described in, 5.2.3 unless the unclean condition constitutes a health or safety hazard. However, the exterior of the property shall be maintained in accordance with the Ready to Show Condition requirements with the sole exception of personal property. These items of value should be moved inside a garage or structure if available.

Personal Property

The Contractor shall not remove any personal property unless it constitutes an imminent health or safety hazard. Debris is not considered Personal Property.

Rents, Fees, Dues and Assessments

The Contractor shall not be responsible for payment of ground rents, fees, condominium or homeowner’s association (HOA) dues or special assessments.

Environmental Compliance

Unless otherwise directed by the COR, the Contractor shall not be responsible for the environmental compliance requirements identified under Section 5.2.6 unless the environmental condition is an imminent health or safety hazard to the public or is contributing to the deterioration of the property.

Rental Property Management

The Contractor shall not rent custodial properties.

5.2.7 COSMETIC ENHANCEMENTS AND/OR REPAIRS

Cosmetic enhancements and/or repairs may be requested by the Asset Manager (AM) to increase marketability and/or the net return to HUD. The AM shall create a work order in P260 for the required repairs and submit it for approval to the AM COR. When repair work orders are advanced in P260 by the AM upon AM COR approval, the Contractor shall carefully review the work orders and estimate the costs to complete the repairs utilizing HUD’s cost estimating tool within two (2) business days of receipt.

If there are any questions regarding the extent or type of the repairs, the Contractor shall communicate with the AM (through P260) and resolve the questions. After all issues have been resolved, the AM shall update the work order and the Contractor shall complete the cost estimate within two (2) business days using the cost estimator, if available. Prior to completing the repairs, the Contractor shall order bids from Subcontractors to complete the work. The Contractor shall review the bids to make sure they are in-line with the work specifications as outlined on the work order and that the Subcontractors cost estimates are supported by Contractors own cost estimates. Where bids exceed the estimates generated by the industry accepted cost estimating tool, the AM shall submit the final work order and associated bids to the FSM COR for approval prior to completion of the requested repairs.

Davis Bacon Wage Determinations

For repairs in excess of $2,000, the Contractor shall obtain prevailing wage determinations from http://www.wdol.gov/. obtain and review weekly Subcontractor payroll records and assure compliance will all applicable Davis-Bacon Act and other requirements.

Performance Standards

a) Standard: 100% of work orders are responded to timely and completed within the amount approved by the cost-estimator

AQL: 95%

5.2.8 Purchaser Post-Closing Complaints

The Contractor shall respond to and notify the COR of any unresolved complaint from purchasers no later than two (2) business days following receipt of the complaint. The Contractor shall resolve post-closing complaints no later than thirty (30) calendar days following receipt of the complaint, shall notify the COR of the resolution via email, and shall document the resolution in P260. In those instances, when the Contractor believes that HUD may be liable for a claim, the Contractor shall provide the COR a http://www.wdol.gov/ written statement regarding its determination of HUD’s potential liability and estimate of the cost of resolving the complaint at least fifteen (15) calendar days prior to the expiration of the thirty (30) day resolution period. The COR may direct the FSM Contractor to make repairs or compensate the complainant if the COR determines that either is appropriate. The Contractor may be entitled to reimbursement as a pass-through expense of cost incurred to resolve the complaint if determined no fault of the Contractor. Post-closing complaints that arise out of failure to perform any portion of the PWS, failure to disclose critical information on a property, other errors or omissions on the part of the Contractor or its employees, Subcontractors or agents of the foregoing, shall be resolved as a Contractor Expense.

5.3 REQUIRED REPORTS

Reviewing the periodic reports that the Contractor submits provides the COR with regular, standardized information about specific performance matters. Reviewing these reports will be one of the means of monitoring the Contractor's adherence to the PWS and of measuring its performance against the Performance Requirements Summary (PRS). The COR will review these reports when they are submitted and, as appropriate, request supporting or clarifying information. The required reports are inclusive of, but not limited to, the following:

Quality Control Review Report

A monthly report summarizing, at a minimum, the results of the Contractors QC actions and findings for QC reviews conducted during the prior month and including corrective actions planned to address those findings. The Report shall also include a copy of the previous month’s Communication Log. This report must be forwarded electronically via email to the COR by the tenth (10th) day of the month, following the month of activity covered in the report.

Annual Audited Financial Statement

Each year, no later than ninety (90) calendar days before the expiration of the base year and each option year, the contractor shall deliver to the CO an original hard copy of the contractors most-current, audited financial statement.

Ad Hoc Reports

As required from time to time by the COR or Contracting Officer, the Contractor shall provide information necessary to satisfy program inquiries from Federal and non-federal agencies, entities, and individuals. For example, the Contractor may be asked to prepare a report on HUD properties damaged by a natural disaster. Ad Hoc report requests will specify the required format, content, distribution, and due date.

Performance Standards

a) Standard: 100% timely submission of monthly QC report, accuracy of billing, adequacy of updates to property management plan.

5.4 Quality Assurance

Quality Assurance

All properties are subject to quality assurance inspections by HUD or its designees to verify the Contractor is performing to the level required under this PWS and in accordance with the Contractors Property Management Plan. HUD staff or any other HUD designee will conduct property inspections at any time of their choosing. Property selection may be based on a combination of random and risk based targeting methods and may include properties that are in Custodial (Section 5.2.6) and Held Off Market (Section 4.4) status.

If a property has been in inventory for more than seven (7) calendar days and through inaction of the Contractor is determined to not be in Ready to Show Condition, the Contractor may be subject to administrative actions to include defective performance letter(s) or progressive steps to ensure compliance with maintaining properties assessed. If it is determined that a vacant lot or Custodial Property is not being maintained in accordance with the requirements of this PWS and there is no COR approval permitting such condition the Contractor may be subject to administrative actions to include defective performance letter(s) or progressive steps to ensure compliance with maintaining properties assessed. Negative administrative actions will not be assessed during the time permitted to remedy Vandalism, Casualty Damages or other issues as determined by the COR to be no fault of the Contractor.

5.4.1 Quality Assurance Reviews

When defective performance is noted through HUD’s quality assurance activities, HUD will request that…