Attachment 3 FSM 3 6 Conformed Working Draft 2_1_12.pdf

PERFORMANCE WORK STATEMENT

Management and Marketing

Support Services: Field Service Manager (FSM) 3.6

Performance Work Statement

TABLE OF CONTENTS

SECTION C - DESCRIPTION/SPECIFICATIONS 6

1 GENERAL INFORMATION 6

1.1 BACKGROUND 6

1.2 OVERVIEW OF ASSET DISPOSITION CONTRACT STRUCTURE 7

1.3 OVERVIEW OF THE ASSET DISPOSITION PROCESS (ADP) 8

1.4 ASSIGNMENT OF ASSETS 8

1.5 GEOGRAPHIC AREAS ADMINISTRATION AND OVERSIGHT 9

1.6 PURPOSE AND OBJECTIVES FOR THE FIELD SERVICE

MANAGER 9

2 ABBREVIATIONS, DEFINITIONS, ACQUISITION TYPES 10

2.1 ABBREVIATIONS 10

2.2 DEFINITIONS 11

2.3 ACQUISITION TYPES 17

3 GOVERNMENT PROVIDED GOODS AND SERVICES 18

3.1 INFORMATION SYSTEMS 18

3.1.1 SINGLE FAMILY INSURANCE SYSTEM (SFIS) 18

3.1.2 FHA CONNECTION 18

3.1.3 P260 18

3.1.4 SINGLE FAMILY ACQUIRED ASSET MANAGEMENT SYSTEM (SAMS)

3.2 ACCESS TO HUD INFORMATION SYSTEMS 18

3.2.1 SECURITY ACCESS 19

3.2.2 SYSTEMS ACCESS AUTHORIZATION 19

3.3 HUD PROVIDED TRAINING 19

3.4 APPLICABLE DOCUMENTS 20

4 CONTRACTOR PROVIDED GOODS AND SERVICES 20

4.1 GENERAL 20

4.2 CONTRACTOR EXPENSES 20

4.3 INTERFACE EQUIPMENT AND SOFTWARE 20

4.4 SYSTEMS SECURITY ADMINSTRATOR 20

4.5 COST ESTIMATING TOOL 21

5 DESCRIPTION OF SERVICES 21

5.1 GENERAL REQUIREMENTS 21

5.1.1 INFORMATION MANAGEMENT 22

5.1.1.1 HUD Provided Information Systems 22

5.1.1.2 Daily Posting of Records 22

5.1.1.3 Work Orders 22

5.1.1.4 Imaging 23

5.1.1.5Date Stamps 23

5.1.1.6 Physical File Maintenance and Retention 23

5.1.1.7 Delivery of Files Upon Request 23

5.1.1.8 Information Security 23

5.1.2 OFFICE FACILITIES 24

5.1.3 CUSTOMER SERVICE 24

5.1.3.1 Business Hours 24

5.1.3.2 After Business Hours 24

5.1.3.3 Response Time 25

5.1.3.4 Toll Free Phone Number 25

5.1.3.5 Communications Log 25

5.1.3.6 Freedom of Information Act 25

5.1.3.7 Government Inquiries 25

5.1.3.8 Other Correspondence 25

5.1.3.9 Litigation 25

5.1.4 MEETINGS 26

5.1.5 HUDs APPROVAL AND ACCEPTANCE RIGHTS 26

5.1.5.1 WRITTEN APPROVAL 26

5.1.5.2 EFFECT OF APPROVAL 26

5.1.6 COMPLIANCE WITH LEGISLATIVE, REGULATORY AND POLICY

REQUIREMENTS 26

5.1.7 QUALITY CONTROL PLAN (QC) 26

5.1.7.1 Quality Control Plan 26

5.1.7.2 Quality Control Reviews 27

5.1.7.3 Quality Assurance Reviews 27

5.1.8 PROPERTY MANAGEMENT PLAN (PMP) 27

5.1.9 CONTINGENCY PLAN 28

5.1.10 PERFORMANCE AND PAYMENT BOND 28

5.1.11 LIEN RELEASES 28

5.1.12 CONFLICTS OF INTEREST 29

5.1.12.1 General Rule 29

5.1.12.2 Pass-Through 29

5.1.12.3 Kick-backs, Rebates, Referral Fees 29

5.1.12.4 Excluded Purchasers 29

5.1.13 NOTICES 29

5.1.14 ELECTRONIC DISCLOSURES, RECORDS & SIGNATURES 29

5.2 PROPERTY MANAGEMENT 30

5.2.1 Pre-Conveyance 30

5.2.1.1 Inspections 30

5.2.1.1.1 Pre-Conveyance Inspection 30

5.2.1.1.2 Overallowable Inspection 30

5.2.1.1.3 Surchargeable Damage Inspection 30

5.2.1.1.4 Occupied Conveyance Inspection 31

5.2.2 Acquisition (Post-Conveyance) 31

5.2.2.1 HUD Property Inspection 31

5.2.2.1.1 Part I of the HPIR 31

5.2.2.1.1.1 Cost Estimation 31

5.2.2.1.2 Part II of he HPIR 32

5.2.2.1.2.1 Health & Safety Hazards 32

5.2.2.1.3 Part III of the HPIR 32

5.2.2.2 Initial Securing 32

5.2.2.3 Initial Clean-out Services 33

5.2.2.3.1 Disposal of Debris, Refuse and Personal Property 33

5.2.2.3.2 Post Emergency Signs 33

5.2.2.3.3 Repair Broken Windows and Doors 33

5.2.2.3.4 Ensure Proper Access 33

5.2.2.3.5 Winterization 33

5.2.2.3.6 Prevent Further Moisture Damage 33

5.2.2.3.7 Install Sign-in Sheets 33

5.2.2.3.8 Health &Safety Hazards and Emergency Repairs 33

5.2.3 PROPERTY MAINTENANCE 33

5.2.3.1 Ready to Show Condition 34

5.2.3.2 Routine Inspections 34

5.2.3.3 Quality Assurance 34

5.2.4 UTILITIES 34

5.2.4.1 Utility Liens 35

5.2.4.2 Utility Charges 35

5.2.4.3 Purchaser Testing 35

5.2.4.4 Occupied Properties 35

5.2.5 RENTS, FEES, DUES, AND ASSESSMENTS 35

5.2.5.1 Homeowner’s Association Fees, Dues, Ground Rents and Non-Tax

Assessments 35

5.2.5.1.1 Mortgagee Responsibility 36

5.2.5.1.2 Additional Notifications 36

5.2.6 ENVIRONMENTAL COMPLIANCE 36

5.2.6.1 Lead Based Paint 36

5.2.6.1.1 Lead Based Paint Work Orders 36

5.2.6.1.2 Compliance Requirements 36

5.2.6.1.3 Lead Based Paint Inspections 37

5.2.6.1.4 Stabilization and Clearance 37

5.2.6.1.5 Costs 37

5.2.6.1.6 Philadelphia, PA 37

5.2.6.1.7 Asset Control Areas 37

5.2.6.2 Mold 37

5.2.6.3 Other Environmental Hazards 38

5.2.6.4 CERCLA Compliance 38

5.2.6.4.1 Lease Restrictions 38

5.2.7 TERMITES AND WOOD DESTROYING ORGANISMS 38

5.2.7.1 Clearance 39

5.2.7.2 Active Infestation 39

5.2.8 VANDALISM 39

5.2.8.1 Other Vandalism Repairs 40

5.2.8.2 Missing Appliances 40

5.2.8.3 GTR Notification 40

5.2.9 RENTAL PROPERTY MANAGEMENT 40

5.2.10 CUSTODIAL PROPERTIES 41

5.2.10.1 Notification 41

5.2.10.2 Ready To Show Condition 41

5.2.10.3 Personal Property 41

5.2.10.4 Rents, Fee, Dues and Associations 41

5.2.10.5 Environmental Compliance 41

5.2.10.6 Rental Property Management 41

5.2.11 HELD OFF MARKET (HOM) CODES 41

5.2.12 VACANT LOTS 42

5.2.13 EVICTIONS 42

5.2.14 DEMOLITIONS 42

5.2.14.1 Historic Reservation Requirements 42

5.2.14.2 Legal Notification Requirements 42

5.2.15 ONAP PROPERTIES 43

5.2.16 TRANSMITTAL PROCESSING 43

5.2.17 COSMETICS ENHANCEMENTS AND/OR REPAIRS 43

5.2.17.1 Cosmetic enhancements and/or repairs requested 43

5.2.17.2 Davis Bacon Wage Determinations 43

5.3 PERFORMANCE REQUIREMENTS SUMMARY (PRS) 44

5.4 REQUIRED REPORTS 46

5.4.1 QUALITY CONTROL REVIEW REPORT 47

5.4.2 AUDITED FINANCIAL STATEMENT 47

5.4.3 AD HOC REPORTS 47

6 TRANSITION 47

6.1 START-UP 47

6.1.1 CONTRACTOR RESPONSIBILITIES 48

6.1.2 HUD RESPONSIBILITIES 49

6.1.2.1 Review of Contractors Plans 49

6.1.2.2 Orientation 49

6.1.2.3 Policy and Procedures 49

6.4.2.4 Systems 50

6.2 RAMP UP 50

6.2.1 TRANSITION SCHEDULE 50

6.2.1.1 61 st Day 50

6.2.1.2 91 st Day 50

6.2.1.3 136 th

Day 51

6.3 TRANSITION OUT 51

SECTION C: DESCRIPTION/SPECIFICATIONS

1 GENERAL INFORMATION

1.1 BACKGROUND

This Performance Work Statement (PWS) describes the services required to assist the United States Department of Housing and Urban Development (HUD) with property and preservation services for its Real-Estate Owned

(REO) portfolio.

The Federal Housing Administration (FHA), an organizational unit within HUD, administers the single-family mortgage insurance program. FHA insures approved lenders against the risk of loss on mortgages obtained with

FHA financing. In the event of a default on an FHA insured loan, the lender acquires title to the property by foreclosure, a deed-in-lieu of foreclosure, or other acquisition method, files a claim for insurance benefits and conveys the property to HUD. As a result of acquisitions through the mortgage insurance program and other programs, HUD has a need to manage and sell a sizable inventory of single-family homes in a manner that promotes home ownership, preserves communities, and maximizes return to the FHA insurance funds. HUD is the largest single seller of real estate in the US. In fiscal years 2007 and 2008, the Department sold 49,385 and

46,333 single-family homes respectively.

HUD administers the REO disposition program through four (4) Homeownership Centers (HOCs) located in:

Philadelphia, Pennsylvania; Atlanta, Georgia; Denver, Colorado; and Santa Ana, California. Each HOC is responsible for a designated geographic area. Within each HOC there will also be designated contract areas for

Field Service Managers.

Since 1999, HUD has been outsourcing the disposition of its REO inventory to Management and Marketing

(M&M) Contractors. This acquisition is part of the third generation of M&M services (M&M III). Under the previous generations of M&M contracts, HUD contracted with a single entity to provide all of the administrative, program support, management and marketing services throughout the United States, the

Caribbean, Guam and the Northern Mariana Islands. The second generation of M&M contracts will expire in calendar year 2009. To ensure the continued success of its disposition program and to further capitalize on the private sector’s disposition expertise, in 2007, HUD conducted extensive market research on industry best practices surrounding the REO asset disposition process to structure the third generation of the contracting program, herein after referred to as M&M III. Based on market research results for M&M III, HUD developed a disposition structure for the management and marketing of REO inventory that will streamline its operations, capitalize on the expertise of its potential Contractors, and provide flexibility to meet changing market conditions in the REO industry.

Key elements of the disposition structure include:

Centralization of mortgagee compliance functions under a Mortgagee Compliance Manager (MCM) responsible for pre- and post-property conveyance activity including approval of claims for payment, title reviews, and inspection reviews.

Separation of marketing functions Asset Managers (AM) from property management functions Field Service

Managers (FSM).

Creation of an Oversight Monitor (OM), focused on overall portfolio analysis, monitoring, and oversight of the disposition processes.

1.2 OVERVIEW OF ASSET DISPOSITION CONTRACT STRUCTURE

This section describes the four (4) entities under the M&M III disposition structure and the roles and responsibilities of each Contractor within the structure.

The entities under the new disposition strategy include:

Oversight Monitor (OM)

Mortgagee Compliance Manager (MCM)

Asset Manager (AM)

Field Service Manager (FSM)

Section 1.6 includes a detailed summary of the purpose and objectives of the FSM Contractor. Below is a summary of the purpose and objectives of other Contractors in the M&M III asset disposition structure.

Oversight Monitor (OM)

The OM’s primary responsibilities are to inform the government of the performance of its REO portfolio and to ensure the efficiency and effectiveness of the disposition process. Specifically, the OM shall provide oversight monitoring; develop and maintain asset allocation; conduct portfolio analysis and reporting; and review the

M&M III business processes.

Mortgagee Compliance Manager (MCM)

The Mortgagee Compliance Manager shall perform a variety of pre- and post- property conveyance services to ensure that HUD's interests are protected. These services will include: reviewing property inspections to ensure the property is in conveyance condition; resolving conveyance exceptions; providing guidance to Mortgagees related to pre-conveyance and post-conveyance responsibilities; and leveraging HUD’s software and information systems to execute and complete the tasks within its contract.

Asset Managers (AM)

The AMs are responsible for the marketing and sale of REO property. AMs will be contracted to market HUD-owned properties within their selected geographical area.

1.3 OVERVIEW OF THE ASSET DISPOSITION PROCESS (ADP)

M&M III consists of the following major processes; (1) Pre-Conveyance Activity; (2) Conveyance Activity; (3)

Claim Review Activity; (4) Management Activity; (5) Marketing Activity; (6) Closing Activity; and (7)

Oversight Monitoring.

1.4 ASSIGNMENT OF ASSETS

Property assignments will begin during the Ramp-up phase of the transition period (See Section C.6.2, Ramp-up). During this phase, HUD will begin to assign new acquisitions and transfer unsold inventory, held off market and custodial properties to the Contractor.

Asset Assignments and Performance:

Through the life of the contract, the Government Technical Representative (GTR) will monitor contractor performance based on HUD’s Quality Assurance (QA) procedures. The Government will issue a Quarterly

Performance Report (QPR) beginning in the 4th month of contract award. Contractors who are performing at a satisfactory level as indicated on the QPR will continue to receive new property acquisitions within their awarded geographical area. Contractors who are performing at below a satisfactory level may find their assignments impacted by the following:

1. Realignment: The Government may unilaterally realign the existing geographic area in accordance with the clause H.2, Option to Increase/Decrease the Geographic Service Area. After meeting the guaranteed contract minimum established in Paragraph I.4, the Government reserves the right to non-competitively increase or reduce the geographic service area of this contract through contract modification. As previously noted, the resulting modification will realign the geographic area of the affected contract, but will not increase the original contract ceiling, unless one of the authorities in

FAR Subpart 6.302 is cited. Realignment of the geographic area will become effective for all new assignments made after the effective date identified on the realignment modification.

Assignments/Orders placed prior to a realignment modification being issued under this authority will remain with the existing contractor, unless the Government invokes a full or partial termination in accordance with FAR Part 49. The Government intends to utilize this clause as mechanism to incentivize a high level of performance by rewarding the most highly performing contractors with an opportunity to expand their geographic service area and provide a disincentive for non-performance of contract requirements by reducing the geographic service area of contractors who fail to meet contract expectations.

2. Non-Assignment: The Government may unilaterally stop assigning assets to a Contractor due to non-performance. Contractors are not guaranteed any new assignments if the Government has stopped assigning assets. The Government will continue to review and monitor the Contractor’s performance and if performance has shown improvement, the government reserves the right to make new assignments of assets to this Contractor after a period of non-assignment.

Option Periods:

A satisfactory contract year-end performance rating is required for exercise of an option. During the option period, HUD may, at its discretion, continue to assign assets equally among satisfactory performing Contractors within a geographic area, may allocate assets based on each Contractor’s quarterly performance results, or may allocate assets based upon a asset allocation methodology developed by or on behalf of the Government. If assets are allocated, generally, the best performers will be assigned the highest number of assets within a geographic area and lower performing Contractors will generally be assigned a lesser number of assets

1.5 GEOGRAPHIC AREAS ADMINISTRATION AND OVERSIGHT

There will be a Contracting Officer (CO) and a Government Technical Representative (GTR) for each of the entities listed under Section 1.2 of this PWS. The contracts will be administered from the respective program/geographic areas and the M&M Acquisition Center in Atlanta, Georgia. The program area administration will be as follows:

OM – HUD Headquarters, Washington, DC

MCM - National Servicing Center (NSC), Oklahoma City, OK

AM/FSM – Designated Homeownership Centers

1.6 PURPOSE AND OBJECTIVES FOR THE FIELD SERVICE MANAGER

The purpose of this contract is to obtain property management services as detailed in Section 5.2. FSMs are companies that provide property maintenance and preservation services consisting of, but not limited to, inspecting the property, securing the property, performing cosmetic enhancements/repairs, and providing on-going maintenance. As part of the FSM 3.6 Solicitation, the government anticipates awarding a single FSM contract in each of the identified geographic areas. Properties acquired by HUD will be assigned to FSMs as discussed in Section 1.4.

Offerors will use this information to propose a technical solution for each of the objectives listed below, and further detailed in Section 5. The technical solution will consist of, but will not be limited to, description of the procedures, documents, or reports that will be developed to meet the objectives.

HUD has identified six primary objectives for its Field Service Managers. They are to ensure that:

FHA insured properties are maintained in a manner that preserves communities;

HUD has real time access to all property related information;

Properties are secured and safe from hazardous conditions;

Property values are preserved;

Properties are maintained in a manner that reflects a high standard of care;

There is a high level of customer satisfaction with HUD’s property disposition program.

2 ABBREVIATIONS, DEFINITIONS, ACQUISITION TYPES

2.1 ABBREVIATIONS

ABBREVIATIONS Definition

ACA Asset Control Area

AR Accounts Receivable

ARR Administrative Remedies Report

AM Asset Manager

BPO Broker Price Opinion

CFR Code of Federal Regulations

CO Contracting Officer

COOP Continuity of Operations Plan

FHA Federal Housing Administration

FOIA Freedom of Information Act

FSM Field Service Manager

GNND Good Neighbor Next Door

GTM Government Technical Monitor

GTR Government Technical Representative

HECM Home Equity Conversion Mortgage

HOA Homeowners Association

HOC Homeownership Center

HOM Held Off Market

HSFDS HUD Single Family Disposition Systems

HUD U.S. Department of Housing and Urban Development

HPIR HUD Property Inspection Report

M&M Management and Marketing Contractor

MCM Mortgagee Compliance Manager

MPR Minimum Property Requirements

MPS Minimum Property Standards

MWP Management Work Plan

NSC National Servicing Center

OM Oversight Monitor

PCR Property Condition Report

PIV Personal Individual Verification

P&P Property and Preservation

PGTR Principal GTR

PMM Purchase Money Mortgage

PMP Property Management Plan

PWS Performance Work Statement

QC Quality Control

QCD Quitclaim Deed

ABBREVIATIONS Definition

QPR Quarterly Performance Report

RDOA Redelegation of Authority

REO Real Estate Owned

SAMS Single Family Acquired Asset Management System

SFB Monthly Billing Fees Transmittal

SFF Pass Through Expense Transmittal

SFIS Single Family Insurance System

SFT Property Tax Payment Transmittal

SPI Special Property Inspection

SSA System Security Administrator

SSC Support Service Contractor sc

2.2 DEFINITIONS

Adverse Occupants – Occupants who are in possession of a HUD owned or Custodial property without the legal right to be there.

Administrative Contracting Office Staff – After contract award, the HUD official authorized to execute and administer contractual documents based on this contract and who is also responsible for the day-to-day administration of this contract and delegating contract administration responsibilities to contracting staff and

Government Technical Representatives.

Acquisition – the process through which a real property or mortgage note secured by a real property is conveyed to HUD. Properties and mortgage notes are conveyed (acquired) from a number of sources. See Acquisition

Types, Section 2.3.

Affiliated Entity - (a) As to Contractor, any Entity (i) controlling, controlled by, or under common control with the Contractor, or (ii) whose Management Officials are an Immediate Family member of a Management Official of the Contractor; or (b) As to Subcontractor, any Entity (i) controlling, controlled by, or under common control with the Subcontractor, or (ii) whose Management Officials are an Immediate Family member of a Management

Official of the Subcontractor, including any agent or broker, licensed under a listing broker, used to list HUD-owned properties; or (c) As to any other Entity, any Entity (i) controlling, controlled by, or under common control with the other Entity, or (ii) whose Management Officials are an Immediate Family member of a

Management Official of the other Entity.

Asset Control Area (ACA) Program – a program for the disposition to eligible participants of HUD-owned properties and future HUD acquisitions of properties and/or mortgage loans located within HUD designated revitalization areas.

Asset Manager – a HUD Contractor responsible for the marketing of HUD REO properties.

Broken Window – a pane of glass that has a visible opening that permits entry or exposure to the elements or which is so badly cracked as to constitute a hazard, e.g. a window with a crack that divides a single pane into two or more pieces.

Casualty Damage – is loss or harm to real or personal property that resulted from an accident, negligence and, or willful destruction, attributed to other than a Contractor, its employees or any affiliated Contractors, Subcontractors or its employees, or an uncontrollable event such as fire, or some act of nature such as windstorm, snowstorm, or hurricane.

Contract Award Date - the date upon which HUD and the Contractor have both executed a Contract based on this PWS.

Contract Effective Date – the date upon which the Contractor begins to perform work under the PWS as identified in block 3 of form SF-1449.

Contracting Officer - the HUD official authorized to execute and administer a contract based on this PWS on behalf of HUD and includes any duly appointed successor or authorized representative.

Control - as to any Entity, the power to direct or cause the direction of the management and policies of such

Entity, whether through the ownership of voting securities, by contract, or otherwise. The term “Controlled” shall have a correlative meaning.

Conveyance Condition – Properties that are conveyed free of surchargeable damage (see definition of surchargeable damage).

Cracked Window – a pane of glass that is still intact but may have slight imperfections that do not amount to an opening in the glass or do not constitute a hazard, e.g. a pane of glass that has been damaged but not broken and there is no danger of falling glass or weather damage to the property.

Custodial Property – a borrower owned property that serves as security for a secretary-held mortgage (including a HECM), which HUD, through the Contractor, has taken possession of following default and vacancy or abandonment.

Days – Unless otherwise specified in the Request for Quotation (RFQ), all references to days means calendar days.

Deteriorated Paint - any interior or exterior painted surface that exhibits cracking, scaling, chipping, peeling, or loose paint.

Defective Service – a service or deliverable that does not meet the performance standard specified in the contract for a specific performance requirement.

Electronic Data Interchange (EDI) – Software application-to-application communication of data in standard format for business transactions, EDI is a set of standards for structuring information that is to be electronically exchanged between and within businesses, and organizations.

Electronic Transmission – a message transmitted electronically in a format displayed on equipment, for example, a personal computer monitor or facsimile machine. The electronic media used to deliver electronic messages displayed on a personal computer monitor includes electronic mail or another method acceptable to

HUD.

Emergency Contact Sign - a visible sign on the property that provides a toll free, 24-hour telephone number to report emergencies.

Entity - any individual, corporation, partnership, joint venture, limited liability company, trust, association.

FHA Connection – an Internet-based system that provides FHA business partners and Contractors secure interaction with HUD mainframe systems to perform required reporting and research the origination and servicing history of FHA insured loans.

Field Service Manager – a HUD Contractor responsible for property management, maintenance, and preservation services.

Financial Control Manual – A manual that describes HUD-Single Family Housing Program's uniform policies and procedures for processing and approving contractor invoices related to the

Marketing and Management of HUD's properties - It also describes the minimum documentary evidence required of each type of transmittal.

Government Technical Monitor (GTM) – a HUD employee who assists the GTR in a limited area of expertise and who may be delegated some duties of the GTR.

Government Technical Representative (GTR) – a HUD employee who acts as the Contracting Officer's representative in all matters concerning the technical aspects of a contract. The GTR is responsible for giving

Contractors technical advice and guidance related to the work required by the contract. Moreover, the GTR is the principal judge of a Contractor's performance, including the quality and timeliness of services.

Health and Safety Hazards - Any condition or situation at the property that exposes the government to abnormal risk, that presents a source of danger, which could cause an accident, or poses the threat of injury, harm to the public or property that must be corrected within one (1) day of discovery or notification.

Home Equity Conversion Mortgage (HECM) – a specialized mortgage product available only to senior citizens that allows them to receive cash payments from the equity in their home.

HUDClips – a web-based directory of all of HUD’s official policies and directives including notices, Mortgagee

Letters, Housing Notices, Handbooks, Code of Federal Regulations and US Codes Titles 12 and 24. The

Internet address for HUD’s Client Information and Policy System (HUDClips) is http://www.hud.gov/offices/adm/hudclips/index.cfm.

HUD-Owned Properties - Those properties that HUD owns by reason of payment of an insurance claim or another acquisition method. Unless otherwise indicated the term includes vacant land and occupied-conveyance properties. HUD-owned properties are also referred to as HUD REO or HUD-homes.

Immediate Family - As to any person and whether by blood, law, or marriage, (i) his or her spouse or domestic partner, (ii) his or her children, siblings, or parents, or (iii) the spouses or domestic partners of his or her children, siblings, or parents.

Management Official - As to any Entity, its owner, partner, principal, shareholder, director, officer, employee, agent, representative, or any individual who directs or has the power to direct its daily operations.

Minimum Property Requirements (MPR) – the minimum level of quality for existing single-family 1-4 unit properties to be considered technically acceptable for insurance under FHA Programs. MPR can be found in

HUD Handbook 4905.1 rev-1 and Mortgagee Letter 2005-48.

Minimum Property Standards (MPS) – a minimum quality level acceptable to HUD for new construction single-family 1-4 unit properties. MPS can be found in 24 CFR 200.926 through 200.926e and HUD Handbook

4910.1 Appendix K.

Mortgagee - an FHA approved mortgage loan holder or mortgage loan servicer. Mortgagee is also referred to as “Lender”.

Mortgagee Compliance Manager – The Contractor responsible for performing a variety of pre- and post-property conveyance services on behalf of HUD.

Mortgagee Neglect – for a mortgage insured on or after January 1, 1977, the failure by a Mortgagee to inspect, or take reasonable action to preserve and protect a property until conveyance to the Secretary securing an FHA insured mortgage, as required by 24 CFR 203.377. Reasonable action includes initiating foreclosure within the required time frame pursuant to 24 CFR 203.355(b).

Non-Surchargeable Damage – damage to the property that is not the responsibility of the Mortgagee because it was not caused by Mortgagee Neglect, fire, flood, earthquake, hurricane, tornado, or for condominiums, boiler explosions.

Notice of Acquisition – the notice provided to the Contractor that a property has been assigned to them.

Generally, notice is conveyed through P260. However, in some cases notice is delivered by the GTR.

Occupied-Conveyance - a formal process through which a Mortgagee receives permission to convey an occupied property to HUD. The term may also be used as a noun to refer to a property conveyed in this manner.

http://www.hud.gov/offices/adm/hudclips/index.cfm

Pass Through Expense – an actual, out of pocket expense incurred and paid by the Contractor that is not deemed a Contractor’s expense and which is listed in the attachment as allowable pass-through expense.

Performance Evaluation - the GTR/GTM’s record of the Contractor’s performance under the contract.

Performance Requirement - the service level that separates acceptable performance from unacceptable performance of a task.

Performance Requirements Summary (PRS) - a listing of the performance requirements under the contract that the Government evaluates on a regular basis. Performance indicators, standards for these requirements, and surveillance methods will be used to determine if the Contractor meets performance standards.

Performance Standard - the Contractor’s performance level on any deliverable as required by the Performance

Work Statement.

Personal Identification Verification (PIV) – a process for personnel identification and verification to gain user approval and access to HUD’s computer systems.

Proposed Rule - proposed changes to the regulations governing HUD policy as published in the Federal

Register.

Quality Assurance (QA) - actions by HUD or its designees to ensure that products or services provided by the

Contractor are within the acceptable quality level for a given performance requirement.

Quality Control (QC) - actions taken by the Contractor to control the production of supplies and services to ensure that they conform to the performance requirements and standards. Quality control procedures are outlined in the Quality Control Plan (QCP) developed by the Contractor.

Random Sampling - a quality verification selection method wherein each object in a group has an equal chance of being selected for quality assurance surveillance.

Ready to Show condition - means the property is free of debris, visible insect/rodent infestations and health and safety hazards. All cabinets, refrigerators, freezers, counter tops, and windows must have been wiped clean and the house must be free of bad smells. All floors and carpets must be clean. All repairs required to correct safety hazards and any approved repairs to be done prior to listing the property must be completed in order for the house to be in ready to show condition. The yard must be free of trash and debris. The grass must be cut, bushes trimmed and holes patched, and or properly secured to protect the public. Swimming pools and wells must be properly secured to protect the public.

Real Estate Owned (REO) – an industry term used to describe properties acquired through foreclosure of a mortgage note, or deed of trust. Single-family properties owned by HUD may be referred to as HUD REO.

Reconveyance - the process of returning a property to a Mortgagee by recording a deed in Mortgagee's name and seeking reimbursement for claims paid plus expenses.

Revitalization Area – an area that has been designated by HUD as exhibiting some or all of the following characteristics: a high concentration of HUD-Owned Properties, low income or low homeownership rates or any other criteria HUD designates. HUD homes within revitalization areas are eligible for discounted sales to certain purchasers.

Revitalization Area Locator (RAL) - a web-based geo-mapping tool that is HUD’s official source for determining whether a property is located in a revitalization area.

Rework - corrective actions taken, or to be taken by the Contractor at its own expense and at no additional cost to HUD to rectify defects identified.

Secretary-Held Properties – borrower owned properties that are the security for mortgage loans held and serviced by HUD either through assignment or origination. Vacant or abandoned secretary-held properties will become Custodial Properties.

Secured Properties – a property where all windows, doors and openings are locked, boarded (where authorized), or otherwise secured to prevent unauthorized entrance by person or animal into any portion of the dwelling, including exterior entrances to crawl spaces, and any other structures on the property, e.g. garages and sheds.

Special Property Inspections (SPIs) – quality assurance inspections of HUD properties performed by HUD contract inspectors.

Subcontractor - a person or entity that enters into an oral or written contract or agreement with the prime

Contractor to perform services, including a listing broker used by the Contractor to list HUD-Owned properties.

Support Services Contractor (SSC) – Contractor responsible for performing financial transmittals, reconciliation of closings, and broker registration services on behalf of HUD.

Surchargeable Damage – damage to the property (1) by fire, flood, earthquake, hurricane, tornado, or, for condominiums, boiler explosion; or (2) for mortgages insured on or after January 1, 1977, damage caused by a

Mortgagee’s failure, as required by 24 CFR 203.377, to inspect or take reasonable action to preserve and protect vacant or abandoned properties.

Targeted Sampling - use of risk based factors rather than random sampling to select properties, files or other subjects for quality assurance or quality control review.

Transition Period – a period of time following contract award when a new Contractor develops the infrastructure necessary to perform contractual responsibilities and when those contractual responsibilities are transferred from a Former Contractor to a new Contractor.

Transmittal – Standard form required under HUD’s Financial Control Manual that Contractors must use to request payment of expenses associated with mortgagee compliance, management and the marketing of HUD-owned properties.

Utilities - gas, electricity and water/sewer services.

Contractor – the individual, partnership, corporation or other entity, which is the party subject to the terms and conditions of this contract.

2.3 ACQUISITION TYPES

The vast majority of acquired properties are conveyed to HUD by a Servicing Mortgagee following foreclosure of an FHA insured mortgage and the filing of a claim for insurance benefits. However, HUD also acquires properties from a variety of other sources. The type of acquisition may impact the method by which the

Contractor is informed of the new assignment and the scope of services required. A listing of possible acquisition sources follows:

Conveyance Foreclosures - properties conveyed to HUD by a Mortgagee following foreclosure, or deed-in-lieu of foreclosure of an FHA insured mortgage, and the filing of a claim for insurance benefits.

Custodial Properties - properties secured by a Secretary-Held mortgage or HECM, which are in default and upon inspection by HUD’s servicing Contractor determined to be vacant or abandoned. Title is not yet in

HUD’s name. Upon receipt of notification from the GTR, the Contractor shall take possession to protect and preserve the property until title is acquired. Custodial properties are not marketable until foreclosure is completed and title is vested in the Secretary of HUD. These properties will be assigned by the GTR.

Mortgagee compliance and marketing and sales tasks are not required for these properties. There is limited property management tasks associated with these properties.

Foreclosed Secretary Held Mortgages (SHMs) - properties acquired as the result of the foreclosure of a mortgage serviced by HUD including assigned and purchase money mortgages. These properties will be assigned by the GTR. Mortgagee compliance tasks are not required for these properties.

Home Equity Conversion Mortgages (HECM) - a property acquired as the result of foreclosure of a reverse mortgage insured by FHA. These properties will be assigned by the GTR and will not be in SFIS.

Legal Settlement - properties that are not FHA-insured but were acquired as a result of a lawsuit or for other reasons such as to accommodate another Federal agency. These properties will be assigned by the GTR.

Repurchases/ Buy Backs – properties repurchased by HUD to resolve a post sale claim by the purchaser of a

HUD-Owned Property. The HUD GTR must approve all repurchase requests.

184s – properties on Indian or tribal lands acquired as a result of foreclosure of a loan guaranteed by HUD’s

Office of Native American Programs under the Section 184, Loan Guarantee for Indian Housing Program of the

Housing and Community Development Act of 1992. These acquisitions may be lease-holds and have tribal specific resale restrictions.

312s - Properties acquired as a result of foreclosure of a HUD Community Planning and Development’s

Rehabilitation Mortgage. Notification of acquisition is provided by memorandum from the current servicer through the GTR.

3 GOVERNMENT PROVIDED GOODS AND SERVICES

3.1 INFORMATION SYSTEMS

The Contractor shall use the systems made available by HUD to perform on-going disposition activities as a source of data for the performance of this contract The systems include all HUD provided systems that are used by contractors engaged in the disposition of HUD’s REO portfolio, including any systems used by the MCM, AM and FSM Contractors. The HUD provided systems are as follows:

3.1.1 SINGLE FAMILY INSURANCE SYSTEM (SFIS)

The Single Family Insurance System (SFIS) is HUD’s primary system of record for insurance and claim payment status of all FHA insured single family loans. SFIS also includes the Single Family Insurance Claims

Subsystem, A43C. Upon notification of an acquisition resulting from an insurance claim, the Contractor may access SFIS to review insurance and claim data to meet the requirements of this PWS.

3.1.2 FHA CONNECTION

The FHA Connection is an Internet based system through which Mortgagees report the status of insured loans.

Additionally, the FHA Connection allows HUD to post information of interest to Mortgagees.

3.1.3 P260

P260 is an Internet based system that will serve as the primary system of record for all REO case management transactions. This system will assign each HUD-owned property for Contractors to track the disposition activity from conveyance to sale. This system integrates data from SFIS, FHA Connection, and SAMS Accounting.

3.1.4 SINGLE FAMILY ACQUIRED ASSET MANAGEMENT SYSTEM (SAMS)

The Single Family Acquired Asset Management System (SAMS) is HUD’s primary system of record for tracking financial and accounting data for HUD-Owned properties.

3.2 ACCESS TO HUD INFORMATION SYSTEMS

Contractor employees (including Subcontractors) who will need to have access to HUD information systems must undergo a background investigation. See Clause HUDAR 2452.239-70.

3.2.1 SECURITY ACCESS

Due to the sensitivity of property and contractor profile data, access to HUD systems will 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 will submit to the GTR an original and one copy of completed Standard Form 85P, Questionnaire for Public Trust Positions, Optional Form 306 and FD-258 Finger

Print Chart. Contractor must submit required forms for staff requiring system access within 30 days of contract award. Contractor staff may be required to provide other background information as deemed appropriate for the requested security access level. 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 GTR no 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 Section 3.1 and the justification for each employee’s level of access. The

Contractor shall not provide access to individuals until HUD provides written authorization.

3.2.2 SYSTEMS ACCESS AUTHORIZATION

Subject to any necessary security clearances, HUD will grant the Contractor authorization to access the HUD information systems, described in Section 3.1.

3.3 HUD PROVIDED TRAINING

During the Transition Period, HUD will provide training for the Contractor to include key personnel and staff as approved by HUD. The training will be on policy, processes and systems usage. There will be no cost for the training except that the Contractor shall be responsible for travel and lodging expenses incurred by its staff attending the training. HUD will bear the cost for all training materials provided. The training will be provided during the Transition Period to ensure that the Contractor shall be familiar with all relevant systems and processes. The training will be held at the HUD/HQ location or at one of the 4 HOC areas and will involve the following, as applicable:

P260 Training: Training on the P260 and system data usage.

SAMS Training: Training on SAMS and system data usage.

FHA Connection: Training on system usage.

SFIS: Training on system usage.

Policies and Procedures: Training on HUD policies and procedures surrounding the asset disposition process.

3.4 APPLICABLE DOCUMENTS

Many of the applicable documents, handbooks, forms, user guides, and other policy documents referenced in this PWS are publicly available on the internet at the sites identified in Attachment 2 – Applicable Documents.

4 CONTRACTOR PROVIDED GOODS AND SERVICES

4.1 GENERAL

Except as otherwise expressly provided in this PWS, the Contractor shall provide everything required to perform the services under a contract based on this PWS. The Contractor shall be responsible for knowing what items to furnish in the accomplishment of all tasks.

4.2 CONTRACTOR EXPENSES

All costs of performance under a contract based on this PWS are at the expense of the Contractor unless otherwise specifically identified in this contract.

4.3 INTERFACE EQUIPMENT AND SOFTWARE

To provide capability for direct data entry and data review from the designated HUD systems, the Contractor shall provide equipment that meets the minimum requirements discussed in this section.

All personal computer configurations shall be in accordance with HUD’s minimum personal computer system configurations in effect at the time of contract award. Also all parties will ensure compatibility with the HUD network.

If such configurations change during the term of this contract, HUD must notify the Contractor by letter of subsequent configurations and the effective date of any such change.

4.4 SYSTEMS SECURITY ADMINISTRATOR

The Contractor shall designate a Systems Security Administrator (SSA) no later than ten (10) days of the effective date of the contract and provide this information to the GTR within this timeframe. SSA must complete the mandatory HUD specialized on-line security training course designed for this position. The SSA shall use forms provided by HUD to initiate requests for user access to HUD IT systems and to request access modifications and deletions. The Contractor shall certify, not later than twenty (20) business days from the effective date of the contract that all staff has received instruction in system security issues, are familiar with the contents of the current version of HUD Handbook 2400.25 Rev. 2, Information Security Program.

Additionally, this certification must be made within seven (7) days for any new hires.

The SSA will also be subject to HUD’s IT General Controls and Monitoring of Contractors security policy.

The SSA shall conduct annual security-self assessments and content will be subject to verification by facility inspections to ensure compliance with all HUD’s IT security policies.

4.5 COST ESTIMATING TOOL

The Contractor shall use a comprehensive cost estimation and valuation tool during the base period that is designed to provide replacement or improvement costs for property preservation and repair, provide damage estimates, and validate bids submitted for repairs. The tool should be an industry standard application such as

Marshall & Swift or Xactimate. Repair, replacement or improvement cost estimates will consider labor, material, equipment, productivity rates, mark-up and taxes for reconstruction work. The Contractor shall use the cost estimating tool to validate the reasonableness of bids submitted for repairs and improvement costs.

After the expiration of the base period, HUD will identify an industry standard cost estimation tool, to be used by all FSM contractors.

5 DESCRIPTION OF SERVICES

The tasks under this PWS, whenever necessary, have been described as outcomes and the Contractor may determine the most efficient method for accomplishing the task in accordance with HUD’s purposes and objectives in Sections 5.1 and 5.2. Some tasks are prescribed in part by regulation and legislation and specific process steps have been identified.

5.1 GENERAL REQUIREMENTS

The purpose of this performance based contract is to obtain property management and preservation services to achieve the outcomes described in Section 1.6. In general, the contractor shall perform inspections, preservation, maintenance, and property management services for HUD-Owned properties.

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 maintain all properties in a manner that results in properties that are clean, safe, secure and sanitary and preserves property value. As described in Section 5.1.9, the Contractor shall prepare, maintain and implement a comprehensive Property Management Plan consistent with the preliminary Property Management Plan submitted during the bid process. In performing the tasks required under this section, the Contractor shall image and/or upload all required reports, documents, inspections and information about property condition, management and maintenance into P260.

5.1.1 INFORMATION MANAGEMENT

The Contractor shall meet the information management and information transfer requirements in this PWS. The

Contractor shall have access to HUD owned or HUD designated central information management systems.

These system(s) will be the central and primary sources of information for the execution of the Contractor’s responsibilities.

5.1.1.1 HUD Provided Information Systems

The Contractor shall use the systems made available by HUD, as described in Section 3.1, to perform on-going activities related to execution of the tasks within the contract. Contractor employees shall complete HUD PIV process for security clearances and annual security training.

5.1.1.2 Daily Posting of Records

The Contractor shall update P260 with all records of actions taken for property management consisting of, but not limited to, the HUD Property Inspection Report, before and after pictures and supporting documentation for cost estimates. HUD will have the ability to view daily activity associated with property management activities.

5.1.1.3 Work Orders

Work orders for repairs, lead based paint inspections, stabilization, termite inspections and treatment shall be ordered via P260. The Contractors shall verify the accuracy and validity of all work orders before submission in

P260.

5.1.1.4 Imaging

The Contractor shall scan and upload electronic images of all required property related documents that have not been electronically transmitted by other parties to P260 no later than one (1) calendar day following receipt or creation by the Contractor.

At a minimum, the Contractor shall image and scan the following documents:

1. HUD Property Inspection Report (HPIR) & FSM Property Inspection Form– only pictures and supporting documentation of the HPIR shall be scanned. The actual report shall be uploaded into P260 as part of the daily posting of records. During the first half of the base year of the contract, the FSM will have to enter the inspector’s basic inspection data and scan the actual inspection report into P260. Thereafter, the inspector himself will have the ability to electronically complete the inspection forms through a portal. The FSM must then review and accept the inspector’s data (submitted electronically) by populating such data into P260.

2. Municipal or association notices, citations, or demands.

3. Repair photographs and supporting documentation showing property before and after Contractor repairs to remove health or safety hazards, and or other repairs conducted as a result of a work order issued via P260.

4. Other Regulatory Required Inspections and related documents (Lead Based Paint and Termite Only).

5.1.1.4 Imaging

The Contractor shall scan and upload electronic images of al required property related documents that have not been electronically transmitted by other parties to P260 no later than one (1) calendar day following receipt or creation by the Contractor.

At a minimum, the Contractor shall image and scan the following documents:

1. HUD Property Inspection Report (HPIR) and FSM Property Inspection Form – only pictures and supporting documentation of the HPIR shall be scanned. The actual report shall be uploaded into P260 as part of the daily posting of records.

2. Municipal or association notices, citations, or demands.

3. Repair photographs and supporting documentation showing property before and after Contractor repairs or removes health and safety hazards conducted as a result of a work order issued in P260.

4. Other regulatory required inspections and related documents (Lead Based Paint and Termite).

5.1.1.5 Date Stamps

The Contractor shall date stamp all incoming correspondence with the date the document was received in the

Contractor’s office.

5.1.1.6 Physical File Maintenance and Retention

The Contractor shall establish and maintain a physical property file that contains all documents and records that pertain to the disposition process until expiration of the contract. Additionally, the Contractor shall keep the individual physical files updated.

5.1.1.7 Delivery of Files Upon Request

Unless otherwise specified, the Contractor shall, no later than five (5) days from receipt of a written request from the CO or GTR, deliver to HUD complete, accurate, legible, and accessible copies of any requested physical files.

5.1.1.8 Information Security

Neither the Contractor nor any of its employees or affiliates will disclose or cause to be disseminated any information relating to the services hereunder to any person not entitled to receive it.