NDMS Program Industry Day March 21 2022.pptx

National Default Management Services (NDMS)

Industry Day Event March 21, 2022

Opening Remarks Thomas B. Herron / Director, Default Division Logistics / Ground Rules Bridget Purdy / Contracting Officer Industry Day Overview Bridget Purdy / Contracting Officer Background/ Program Overview Thomas B. Herron / Director, Default Division Contractor Requirements / Task(s) Overview Thomas B. Herron / Director, Default Division Break Closing Remarks Bridget Purdy / Contracting Officer

Agenda

No audio or video recording is permitted.

Only the designated USDA presenters are permitted to speak. All other attendees should remain on mute.

None of the information stated or presented today should be construed as a revision to the draft solicitation or a component of the final RFP.

The information provided today is subject to change. The written terms and conditions of the solicitation, once issued, will govern over any of the information presented at this Industry Day.

Logistics / Ground Rules

Questions or comments pertaining to the information presented today should be submitted in the chat box, or via email to the procurement mailbox at NDMS-Acquisition@usda.gov by Friday, March 25, 2022, at 4:00 PM ET using the Question and Comments Template posted to Sam.gov

USDA will provide responses to questions/comments received, via posting to Sam.gov; however, USDA is not obligated to respond to all questions/comments, and the decision of whether to respond to a particular question/comment will be solely at USDA’s discretion.

The identity of the individual/company who submitted the question(s) will not be revealed in the response.

Logistics / Ground Rules

Purpose of the Industry Day:

Early engagement with interested parties to share information regarding the NDMS procurement Obtain feedback (i.e. questions/comments) from interested parties that may be utilized by USDA while preparing the final RFP.

A Questions & Answers (Q&A) period will be conducted following release of the final RFP;

Feedback/questions/comments received following this Industry Day, along with the Q&A period after final RFP release will ensure interested parties have sufficient opportunities to provide input on the requirements.

Industry Day Overview

Program Overview USDA RD Section 502 Single Family Housing Direct Loan Program

Applicants/Borrowers Program Eligibility

Portfolio Servicing

USDA Rural Development (USDA RD) Section 502 SFH Direct Loan program provides a wide array of low-interest loan and grant products to assist new and existing low and very-low income homeowners with home purchase and repair options. In contrast to the Guaranteed Loan Program, the Direct program is administered at the state-level by local offices. Each state receives a portion of the total appropriated funding based on census factors (such as substandard housing, rural population, etc.) to carry out their programs.

The Section 502 Direct Loan Program provides low- and very-low-income applicants the opportunity to obtain decent, safe, and sanitary housing in eligible rural areas through a 33 or 38-year fixed rate, low-interest loan. In some cases, applicants are provided with payment assistance, which is a type of subsidy that reduces the mortgage payment for qualified applicants. The amount of assistance is determined by the adjusted household income. Borrowers are required to repay a portion of the payment subsidy received over the life of the loan when the title to the property transfers, or the borrower is no longer living in the dwelling.

Many factors are considered when determining an applicant’s eligibility. Interested applicants must have an adjusted household income at or below the applicable low-income limit for the area where they wish to purchase a home and must demonstrate a willingness and ability to repay debt. Additionally, they must be without decent, safe, and sanitary housing, and unable to obtain a loan from other resources on terms and conditions that can reasonably be expected to meet.

The servicing of these loan is handled in the Servicing Office located in Saint Louis, Missouri. There are currently over 200,000 borrowers being serviced in all 50 states, along with Puerto Rico, Virgin Islands and Guam. The delinquency on this portfolio has been above 15% for the last 10 years and currently is above 23% with over 25,000 loans delinquent greater than 2 payments.

Default Division Need Vendor to provide services as outlined in the Draft NDMS Performance Work Statement (PWS)

Portfolio Management Historical and current state

Portfolio Size Historical and current state

Portfolio Challenge Rural Definitions Generally, rural areas with populations less than 35,000 are eligible, non-income producing activities, generally around 2,000 sf or less and some in rural/REMOTE areas.

Background

USDA RD has determined that a Ten-year multiple Award consolidated services contract is needed to implement a long-term solution to address post-acceleration servicing which will reduce the backlog of foreclosure properties in its inventory. The expected outcome for this requirement is to implement a sustainable model to address the Agency’s requirement for a complete National Default Management Services (NDMS) process for Legal/Foreclosure, Property Management, REO Management/Disposition (REO) and ancillary services. The solution will consolidate all internal and external contracts, Interagency Agreements (IAAs), and Memorandum of Understanding (MOUs) established to provide these critical services.

The Agency has taken interim steps to reduce the amount of time a loan sits in a default state, along with the direct and indirect costs associated with this state, however they have yet to achieve a cost effective nationwide consolidated solution. Inefficiencies in the Foreclosure Legal, Property Management and REO Management/Disposition service areas has led to delays in property liquidation and increases in costs to the Agency.

As of June 30, 2019, there were 17,461 loans in the foreclosure process. Currently, there are 29 states that are fully consolidated under the purview of the SO the rest of the states are executing in a fragmented manner.

Since March 2020, no additional loans have been added to the foreclosure process. The COVID-19 response put an industry moratorium on foreclosures unless the property is vacant. This has increased accounts waiting to be accelerated (pre-foreclosure status). The Agency determined there were 9,896 accounts impacted by the moratorium suspension From Foreclosure Risk Card. Trying to show what we have processed since June 30, 2019 (the 17,461) and what we have now with the two highlighted paragraphs.

USDA RD has determined that a Ten-year multiple Award consolidated services contract is needed to implement a long-term solution to address post-acceleration servicing which will reduce the backlog of foreclosure properties in its inventory. The expected outcome for this requirement is to implement a sustainable model to address the Agency’s requirement for a complete National Default Management Services (NDMS) process for Legal/Foreclosure, Property Management, REO Management/Disposition (REO) and ancillary services. The solution will consolidate all internal and external contracts, Interagency Agreements (IAAs), and Memorandum of Understanding (MOUs) established to provide these critical services.

The Agency has taken interim steps to reduce the amount of time a loan sits in a default state, along with the direct and indirect costs associated with this state, however they have yet to achieve a cost effective nationwide consolidated solution. Inefficiencies in the Foreclosure Legal, Property Management and REO Management/Disposition service areas has led to delays in property liquidation and increases in costs to the Agency.

As of June 30, 2019, there were 17,461 loans in the foreclosure process. Currently, there are 29 states that are fully consolidated under the purview of the SO the rest of the states are executing in a fragmented manner.

Since March 2020, no additional loans have been added to the foreclosure process. The COVID-19 response put an industry moratorium on foreclosures unless the property is vacant. This has increased accounts waiting to be accelerated (pre-foreclosure status). The Agency determined there were 9,896 accounts impacted by the moratorium suspension From Foreclosure Risk Card. Trying to show what we have processed since June 30, 2019 (the 17,461) and what we have now with the two highlighted paragraphs.

Reduce the inventory of foreclosure properties Reduce the amount of time a loan sits in a defaulted state Actively move the accounts through the foreclosure/legal processes for litigation Efficiently dispose of REO Properties Reduce Property Management Costs

Program Objectives / Goals

The objectives/Goals of the NDMS consolidated services contracts will:

Reduce the backlog of foreclosure properties Our goal is to significantly reduce the inventory of foreclosures within in the first 4 years with the expectation the days in foreclosure will be within industry standards.

2. Reduce the amount of time a loan sits in a defaulted state Our goal is to have the Vendor immediately and continuously process the post-accelerated file through liquidation. The expectation is a timely liquidation of the property with a maximum return to the Agency.

3. Actively move the accounts through the foreclosure/legal processes for liquidation Our goal is to reduce the cost per property through efficient handling of both the foreclosure account and REO property.

4. Efficiently dispose of REO property The Agency goal is to dispose of REO properties quickly and maintain the mission of the Agency by showing preference to qualified homeowners in accordance with the CFR 7 .3550.

5. Reduce Property Management costs Reduce the overall cost to the Agency on foreclosure, property preservation and REO.

Focus on Program Success.

The Contractor shall support the USDA, RD, SO with a wide range of NDMS and asset management services including but not limited to Foreclosure (FCL), Real Estate Owned (REO), property preservation services, appraisal services, eviction services, and bankruptcy services.

Considering the importance of the NDMS tasks to the RD mission, it is imperative that the Contractor provide highly capable, skilled, and experienced personnel capable of providing support needs throughout the entirety of life of the IDIQ’s and each TO.

Contractor Requirements

The Contractor shall provide all the activities required to accomplish a foreclosure action, including but not limited to Occupancy Status, appraisals, title services, notifications, publications, and all other tasks necessary to complete a foreclosure under all applicable Local, State, Federal laws and Agency Regulations for both Judicial and Non-judicial foreclosures. The Government expects the successful vendor(s) to complete the foreclosure with an unencumbered title, in the allowable timeframe specified by the HUD Memo.

Foreclosure Services – Section 6.3 NDMS PWS Task 6.3

6.3.1 – Uncontested Foreclosure Services

6.3.2 – Contested Foreclosure Services

6.3.3 – Property Preservation Maintenance Services

6.3.4 – Appraisal and Valuation Services

6.3.5 - Foreclosure Over and Above

The Contractor shall provide services that are required by foreclosure counsel in the prosecution of a foreclosure, both judicial and non-judicial, in accordance with Agency Regulations and Local, State, and Federal laws. The Contractor shall complete the foreclosure and provide USDA RD with an unencumbered title for the properties assigned in any TO.

Examples of Foreclosure Services include but are not limited to the following:

Ordering title.

Reviewing title reports and exceptions.

Drafting Complaint, Summons, Lis Pendens, and other papers necessary to initiate the foreclosure action.

Filing the foreclosure Complaint and Lis Pendens.

Executing all steps necessary to obtain service of process on all defendants, including review of process server affidavits, obtaining court permission to serve by publication, and referral and tracking of published notices.

Preparing legal papers for entry of foreclosure judgment, whether by default or through summary judgment process.

Obtaining judgment of foreclosure, including one court appearance.

Preparing all legal papers to conduct the foreclosure sale.

Conducting, or arranging for the sheriff or other third party to conduct, the foreclosure sale.

Attending the foreclosure sale, when required.

Obtaining judicial confirmation of foreclosure sale, where required by local law.

Prepare and provide all legal papers necessary to convey and unencumbered title to USDA RD or successful third-party bidder.

Contested Foreclosure Services

The Contractor shall provide services that are required by foreclosure counsel in the prosecution of a contested foreclosure, both judicial and non-judicial, in accordance with Agency Regulations and Local, State, and Federal laws. The Contractor shall complete the foreclosure and provide USDA RD with an unencumbered title for the properties assigned in any TO.

Examples of contested foreclosure-related services include, but are not limited to the following:

Ordering title.

Reviewing title reports and exceptions.

Drafting Complaint, Summons, Lis Pendens, and other papers necessary to initiate the foreclosure action.

Filing the foreclosure Complaint and Lis Pendens.

Executing all steps necessary to obtain service of process on all defendants, including review of process server affidavits, obtaining court permission to serve by publication, and referral and tracking of published notices.

Preparing legal papers for entry of foreclosure judgment, whether by default or through summary judgment process.

Obtaining judgment of foreclosure, including one court appearance.

Preparing all legal papers to conduct the foreclosure sale.

Conducting, or arranging for the sheriff or other third party to conduct, the foreclosure sale.

Attending the foreclosure sale, when required.

Obtaining judicial confirmation of foreclosure sale, where required by local law.

Prepare and provide all legal papers necessary to convey and unencumbered title to USDA RD or successful third-party bidder.

Preparation and representing Agency in litigation for contested Foreclosure process.

Property Preservation Maintenance Services (Unoccupied)

The Contractor shall provide initial and recurring maintenance services to preserve and maintain the exterior of the property for minimal depreciation of value for custodial unoccupied properties

Initial Property Preservation Maintenance Services shall include at minimum:

Gaining access and initial securing Lock box installation and re-key of one door Up to six lock changes Initial inspection Post proper sign – in sheets, warning signs and For Sale signs Lawn service up to 15,000 sq ft Securing windows Boarding and/or re-glazing windows when necessary Prevention of further moisture damage Roof repairs (patching and tarping only) Sump pumps and pump outs Winterization, including posting signs/stickers Subsequent de-winterization for inspection and re-winterization after inspection Secure swimming pools, spas, water features per local code Cover electrical service panel and outlet covers Animal Removal (0-35 lbs.)

Winterization of properties – e.g., dry, wet, refrigerant, etc.

Recurring Property Preservation Maintenance Services shall include at minimum:

Securing and boarding as a result of vandalism Repairs as needed based on the results of routine inspections to resecure property Biweekly lawn cut up to 15,000 square feet Snow/ice removal in compliance Salting for ice storms

Appraisal and Valuation Services

The Contractor shall complete appraisals on each identified property utilizing a licensed or certified appraiser. The Contractor shall ensure appraisals are maintained and no older than 12 months. If a new appraisal is required at no fault to the Contractor, it is the Contractor’s responsibility to obtain any additional appraisals. If the property is secured with a lockbox and vacant, the Contractor will perform an interior inspection and complete an “Interior Full Market Value Appraisal.” If the property is occupied, the Contractor may provide an “Exterior Only Appraisal”.

Foreclosure Over and Above

The Contractor shall provide any additional services necessary to ensure foreclosure timelines are maintained and actions completed to ensure USDA RD receives and unencumbered title for the properties assigned in each applicable TO.

Examples of Over and Above Services include, but are not limited to the following:

Removal of Liens Payment of Code Violations Payment of past-due taxes Payment of HOA fees Tree Removal Property Preservation immediate needs Removal of animals (36 lbs. and above) Mold/Mildew Inspection/Remediation/Abatement Water Well Inspection/Septic Storm Damage/Debris Demolition

The Contractor shall perform a monthly property inspection and provide a monthly property inspection report to determine occupancy status for all foreclosure and REO properties, and if unoccupied, generate property maintenance work orders to maintain the exterior of the property.

Examples of Property and Occupancy Inspection Services include, but are not limited to the following:

Capture sufficient pictures to capture the essence of the property and grounds monthly.

Create and deliver a monthly report describing the status of each assigned properties condition, and reason for vacancy determination.

Generate property maintenance work orders to maintain the exterior of unoccupied properties.

Property and Occupancy Inspection – Section 6.4

The Contractor shall perform a monthly property inspection and provide a monthly property inspection report to determine occupancy status for all foreclosure and REO properties, and if unoccupied, generate property maintenance work orders to maintain the exterior of the property.

Examples of Property and Occupancy Inspection Services include, but are not limited to the following:

Capture sufficient pictures to capture the essence of the property and grounds monthly.

Create and deliver a monthly report describing the status of each assigned properties condition, and reason for vacancy determination.

Generate property maintenance work orders to maintain the exterior of unoccupied properties.

The Contractor shall provide Chapter 7 Bankruptcy Services.

Examples of Chapter 7 Bankruptcy Services include, but are not limited to the following:

Motion for Relief Proof of Claim Preparation (if required) Reaffirmation Agreement Bankruptcy Services – Section 6.5 Chapter 7

The Contractor shall provide Chapter 13 Bankruptcy Services.

Examples of Chapter 13 Bankruptcy Services include, but are not limited to the following:

Proof of Claim Preparation & Plan Review Objection to Plan Motion for Relief Payment Change Notification (if needed) Notice of Fees, Expenses, and Charges Post-Stipulation Default / Stay Termination Response to Final Cure Payment Notice (agreed or objected)

Bankruptcy Services – Section 6.6 Chapter 13

The Contractor shall provide Mediation Services to include performing mediation for homeowners under state specific mediation programs, if applicable, homeowners may elect a separate mediation hearing whereby the foreclosure is halted. The Contractor shall represent the Government through resolution. Please note, that in some instances, multiple court hearings are required with Contractor involvement.

Mediation Services – Section 6.7

Contractor shall identify occupancy status at foreclosure sale and proceed, if required, with the eviction process while maintaining the property preservation needs.

The Contractor shall perform all services required to complete the eviction , in accordance with Agency Regulations; Local, State, and Federal laws; and with HB-1-3550. Evictions may be required at any point after the completion of the foreclosure or during the REO sale.

Eviction Services - Section 6.8

The Contractor shall provide all the activities required to dispose of an REO property including but not limited to property preservation services, appraisals, notifications, publications, and all other tasks necessary to accomplish the disposal.

REO Services– Section 6.9 NDMS PWS Task 6.9

6.9.1 – Disposition Services

6.9.2 – Appraisal Services

6.9.3 – Property Preservation Maintenance Services

6.9.4 – REO Over and Above Work

The Contractor shall provide all the activities required to dispose of an REO property including but not limited to property preservation services, appraisals, notifications, publications, and all other tasks necessary to accomplish the disposal as listed below.

Disposition Services

The Contractor shall provide services for the disposal of REO properties for the entire servicing area consistent with 7 CFR 3550.251(c)(1). Addressing the Agency specific guidelines covering the disposal of REO Property discussed in HB-1-3550-Disposing of REO Property – Chapter 16.

Examples of REO Disposition Services include, but are not limited to the following:

Listing REO properties Marketing REO properties Sale of the REO Properties Closing and Post Closing for the REO properties

Appraisal Services

The Contractor shall complete appraisals on each identified property utilizing a licensed or certified appraiser. The Contractor shall ensure appraisals are maintained and no older than 12 months. If a new appraisal is required at no fault to the Contractor, it is the Contractor’s responsibility to obtain any addition appraisals. If the property is secured with a lockbox and vacant, the Contractor will perform an interior inspection and complete an “Interior Full Market Value Appraisal.” If the property is occupied, the Contractor may provide an “Exterior Only Appraisal”.

Property Preservation Maintenance Services

The Contractor shall perform recurring maintenance services.

Initial Property Preservation Maintenance Services shall include at minimum:

Facilitation of field eviction and moving services Gaining access and initial securing Lock box installation and re-key of one door Up to six lock changes Smoke Detectors and all detection devices Initial inspection Post proper sign – in sheets, warning signs and For Sale signs Ready to show, including cleaning, within five (5) working days of assignment or notice of vacancy Interior and Exterior debris removal up to 40 cubic yards Eliminate health and safety hazards within 24 hours of discovery Pest Control (not to include termite or Wood Destroying Organism treatment) Lawn service up to 15,000 sq ft Shrub trimming and grounds maintenance Securing windows Boarding and/or re-glazing windows when necessary Prevention of further moisture damage Roof repairs (patching and tarping only) Sump pumps and pump outs Winterization, including posting signs/stickers Subsequent de-winterization for inspection and re-winterization after inspection Secure swimming pools, spas, water features per local code Cover electrical service panel and outlet covers Install handrails Graffiti abatement Visual LBP inspections on pre-1978 houses Removal of one vehicle Notice to local authorities of POC for violation notices, utility bills, HOA bills, etc.

Animal Removal (0-35 lbs.)

Winterization of properties – e.g., dry, wet, refrigerant, etc.

Gutter Cleaning Cap Dryer Vents Cap Gas Lines Cap Water Lines Cap Exposed Wires Cap Water Lines Cap Exposed Wires

Recurring Property Preservation Maintenance Services shall include at minimum:

Securing and boarding as a result of vandalism Repairs as needed based on the results of routine inspections Recurring janitorial maid refresh Biweekly lawn cut up to 15,000 square feet Snow/ice removal in compliance Salting for ice storms

REO Over and Above Work

In accordance with Over and Above clause in Section III of the contract, the Contractor shall provide any additional services necessary to ensure REO timelines are maintained, and actions completed to ensure a timely sale of the properties assigned in each applicable TO.

Examples of Over and Above Services include, but are not limited to the following:

Replacement of sump-pump Putting services in their name to maintain required utilities Pool securing and maintenance Removal of animals

The Contractor shall provide Program Management Support Services. Program Management Support Services include, but is not limited to Program and Project Planning, Financial Management Support, Risk Management Support, and Performance Monitoring. The Contractor shall provide consultation, planning and support services to manage programs, projects, services, tasks and activities efficiently and effectively.

PM Services - Section 6.10

Examples of Program Management Services include, but are not limited to the following:

Provide project-related data, feedback and updates as required.

Develop, document and maintain an integrated program management plan to coordinate, prioritize and manage resources.

Manage day-to-day activities of assigned Contractor personnel.

Track work progress against identified milestones and delivery dates.

Maintain project documentation including documentation of performance and implement management controls to meet performance, and schedule requirements.

Maintain the Program Management Plan (PMP), and Risk and Issue logs.

Design, develop and implement reporting to communicate progress on projects and other metrics identified as necessary for daily, weekly, and monthly reporting.

Develop and maintain a Quality Control Plan (QCP) that addresses the NDMS scope outlined in the PWS, and includes at a minimum, the management philosophy, structure, and approach in obtaining quality standards for providing contracted services.

Provide access to an information management system capable of:

Promoting secure information exchange between itself, USDA RD, and its industry stakeholders Providing USDA RD with access to an information management system(s) for the services identified in the PWS. The system(s) must be capable of storing, displaying and generating all property and loan data for use by USDA RD, including, but not limited to all related Inspection, Legal and Appraisal documents, loan receivables, accruals, collections, and all relevant task order data.

Providing USDA RD with demonstrations and training on information management system(s) for the services identified in the PWS.

Converting and indexing all physical documents to an electronic Portable Data Format (PDF) and Joint Photographic Expert Group (JPEG) files and make them available to USDA RD for searching and viewing at resolution sufficient to view/print. This includes, but is not limited to, all notes, documentation, photographs, appraisals, and files stored in the Contractor’s systems.

Providing real time status (ordering and tracking) of each assigned RD property, and demonstrate the capability to timely exchange data with other clients’ loan servicing systems (i.e., USDA utilizes LoanServ);

Providing real time financial status of all IDIQ TO’s Providing authorized USDA RD personnel and systems with real time 24/7, secured internet, and direct connection access to all production data. The system must not archive data without USDA RD’s prior, and written, approval compatible with current USDA RD web browsers, currently Microsoft Edge and Google Chrome Enabling no less than one hundred (100) concurrent user accesses to system(s)) Providing the capability for USDA RD to create on demand, ad hoc reports, at a loan/property level and summary level for any data element captured by the Contractor for USDA RD.

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