MCM 4.0_PWS_ALU FINAL DRAFT_3WATERMARKdocx.pdf

Performance Work Statement (PWS)

Mortgagee Compliance Manager 4.0 (MCM)

2/15/2024

Version 1.0

Vision Statement

1.1 Scope of Work

1.2 Background

1.3 Constraints

1.4 Non-Personal Services

1.5 Period of Performance

1.6 Place of Performance

1.7 Hours of Operation

1.8 Special Qualifications

1.9 Post Award/Kickoff Conference

1.10 Status Meetings

1.11 Contractor Travel

1.12 Transition In

1.13 Transition Out

2 Definitions and Acronyms

2.1 Definitions

2.2 Acronyms

3 Government-Furnished Property and Services

3.1 Government Services

3.2 Facilities

3.3 Equipment

3.4 Materials and Information

3.5 Quality Assurance (QA)

4 Contractor-Furnished Items and Services

4.1 Facilities

4.2 Equipment

4.3 Materials

4.4 Contractor Responsibilities

4.5 Contractor Personnel

4.6 Identification of Contractor Employees

5 Specific Tasks

5.1 Pre-Conveyance Activities

5.2 Post Conveyance Activities

5.3 Transition Services (Optional Tasks)

6 Deliverables

6.1 Quality Control Plan

6.2 Acceptance Criteria

7 Related Documents

8 Performance Requirements Summary

Performance Work Statement (PWS)

Mortgagee Compliance Manager 4.0 (MCM)

Vision Statement

Successfully complete pre and post conveyance activities associated with acquisition, claims, and dispositions of the Federal Housing Administration (FHA) Single Family insured assets to ensure HUD’s assets are protected and preserved.

1 General Information

1.1 Scope of Work

The Department of Housing and Urban Development (HUD), Office of Single Family Asset Management (OSFAM), National Servicing Center (NSC) requires contractor support to provide Mortgagee Compliance Manager (MCM) services. The Contractor shall be responsible for pre-conveyance and post-conveyance activities associated with claims, acquisition, and disposition of FHA Single Family insured assets (Conveyed Properties, Claims Without Conveyance Title (CWCOT) and Home Equity Conversion Mortgage (HECM)). Services include:

Pre-Conveyance Activities Post Conveyance Activities Transition Services

Detailed descriptions of specific tasks are provided in Section 5 Specific Tasks.

1.2 Background

The Mortgagee Compliance Manager performs pre and post-property conveyance support services to ensure that HUD's interests are protected. These services include pre-conveyance and post conveyance activities associated with claims, acquisition, and disposition of FHA Single Family insured assets; verifying that the mortgagee has protected and preserved delinquent FHA insured property against damages; completing regulatory and HUD servicing and foreclosure activities; documenting various information on FHA assets held in the Real Estate Owned (REO) System of Record; reviewing property inspections to ensure the property is in conveyance condition; assessing provided claim documentation; resolving conveyance exceptions and providing guidance to Mortgagees related to pre-conveyance and post conveyance responsibilities. Current and historical conveyance request data for fiscal year (FY) 2018 through

FY 2024 year to date is referenced in Appendix A – MCM Historical Data.

HUD has established a disposition structure that includes a Field Service Manager (FSM) and an Asset Manager (AM) for the management and marketing of REO inventory that streamlines its operations, capitalizes on the expertise of its potential contractors, and provides flexibility to meet changing market conditions in the real estate owned industry.

Most pre and post conveyance work is completed using HUD's REO System of Record (HRSR).

However, some work may be initiated or sent via email, fax, or by mail, which requires the scanning and uploading of documents into the HRSR. Current and historical customer service data for fiscal year (FY) 2018 through (FY) 2024 year to date is referenced in Appendix A – MCM Historical Data.

1.3 Constraints

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

24 CFR Part 17

24 CFR Part 203

HUD Handbook 4000.1 (is a PDF file located at HUD CLIPS website and the sections referenced below can be found in the PDF).

o HUD Handbook 4000.1 Section II Origination Through Post-

Closing/Endorsement Part D Appraiser and Property Requirements for Title II

Forward and Reverse Mortgages o HUD Handbook 4000.1 Section III Servicing and Loss Mitigation Part A Title II

Insured Housing Programs Forward Mortgages o HUD Handbook 4000.1 Section III Servicing and Loss Mitigation Part B Title II

Insured Housing Programs Reverse Mortgages o HUD Handbook 4000.1 Section IV Claims and Disposition Part A Title II Claims o HUD Handbook 4000.1 Section IV Claims and Disposition Part B Title II

Disposition o HUD Handbook 4000.1 Section V Quality Control, Oversight, and Compliance

Part A Quality Control of Lenders and Mortgagees o HUD Handbook 4000.1 Section V Quality Control, Oversight, and Compliance

Part E Enforcement o HUD Handbook 4000.1 Appendix 3.0 – Post-Endorsement Fees and Charges

By Location o HUD Handbook 4000.1 Appendix 5.0 – HUD Schedule of Standard Possessory

Action and Deed-In-Lieu of Foreclosure Attorney Fees o HUD Handbook 4000.1 Appendix 6.0 – First Legal Actions To Initiate

Foreclosure And Reasonable Diligence Time Frames o HUD Handbook 4000.1 Appendix 7.0 – Property Preservation Allowances and

Schedules

Section 508 Standards https://www.ecfr.gov/current/title-24/subtitle-A/part-17?toc=1 https://www.ecfr.gov/current/title-24/subtitle-B/chapter-II/subchapter-B/part-203?toc=1 https://www.hud.gov/program_offices/administration/hudclips/handbooks/hsgh https://www.govinfo.gov/content/pkg/PLAW-105publ220/pdf/PLAW-105publ220.pdf

The Contractor shall comply with all applicable records management laws and regulations, as well as National Archives and Records Administration (NARA) records policies, including but not limited to the Federal Records Act (44 U.S.C. chps. 21, 29, 31, 33), and NARA regulations at 36 CFR Chapter XII Subchapter B. These policies include the preservation of all records created or received, regardless of form (paper, electronic, etc.) or characteristics, mode of transmission (email, fax, etc.), or state of completion

(draft, final, etc.).

The Contractor shall gain and maintain access to the following systems:

o FHA Connection o HUD HECM System of Record o HUD’s REO System of Record (HSRS) o Single Family Acquired Asset Management System (SAMS) o Single Family Insurance System (SFIS or A-43C)

The Contractor shall sign up to the following newsflash to stay abreast of all regulations and policy changes:

o FHA Single Family Housing Industry News (FHA INFO) email:

FHAINFO@public.govdelivery.com

1.4 Non-Personal Services

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

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

1.5 Period of Performance

The period of performance shall be for one base period of 12 months and four 12-month option periods (if exercised).

1.6 Place of Performance

The services to be performed under this contract shall be performed at the Contractor's facility.

1.7 Hours of Operation

https://uscode.house.gov/view.xhtml?req=granuleid%3AUSC-prelim-title44&saved=L3ByZWxpbUB0aXRsZTQ0L2NoYXB0ZXIyMQ%3D%3D%7CZ3JhbnVsZWlkOlVTQy1wcmVsaW0tdGl0bGU0NC1jaGFwdGVyMjE%3D%7C%7C%7C0%7Cfalse%7Cprelim&edition=prelim https://uscode.house.gov/view.xhtml?req=granuleid%3AUSC-prelim-title44&saved=L3ByZWxpbUB0aXRsZTQ0L2NoYXB0ZXIyMQ%3D%3D%7CZ3JhbnVsZWlkOlVTQy1wcmVsaW0tdGl0bGU0NC1jaGFwdGVyMjE%3D%7C%7C%7C0%7Cfalse%7Cprelim&edition=prelim https://www.ecfr.gov/current/title-36/chapter-XII/subchapter-B mailto:FHAINFO@public.govdelivery.com

N/A

1.8 Special Qualifications

N/A

1.9 Post Award/Kickoff Conference

The Contractor shall attend any post award conference convened by the contracting activity or contract administration office in accordance with FAR Subpart 42.5 and HUD Acquisition

Regulation (HUDAR) clause 2452.237-79 - Post Award Conference.

1.10 Status Meetings

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

1.11 Contractor Travel

Travel is not anticipated during the contract period of performance. If travel is required, prior to travel, the Contractor shall coordinate with and receive Government authorization from the COR for all travel. Reimbursement of travel costs will be in accordance with the Federal Travel

Regulation and in accordance with FAR 31.205-46.

1.12 Transition In

The Contractor shall, upon the Contracting Officer's written notice, furnish Transition-In services as required. As a successor, the Contractor shall have sufficient personnel on board during the

60 calendar day Transition-In period to ensure a smooth transition with the incumbent

Contractor. The Contractor shall provide an orderly transition of work acceptance and accomplishment such that any impact to the program is minimized. During the Transition-In period, the Contractor shall become familiar with the requirements in order to commence full performance of services by the end of the contract Transition-In period. Transition-In is not required if the successor Contractor is the incumbent Contractor.

1.13 Transition Out

To minimize any decrease in productivity and to prevent possible negative impacts on additional services, the Contractor shall have sufficient personnel on board during the 60 calendar day

Transition-Out period. The incumbent Contractor shall ensure a smooth transition with the successor Contractor during the Transition-Out period, prior to completion of contractual performance. The incumbent Contractor shall aid the successor in the development of plans, procedures and methods for the assumption of all on going work. The Contractor shall provide an orderly transition of work acceptance and accomplishment, such that full control by the successor contractor is achieved by the end of the new contract Transition-In period.

2 Definitions and Acronyms

2.1 Definitions

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.

Asset Manager - A HUD Vendor responsible for the marketing of HUD REO properties.

Business/Workdays - Every official workday of the week which are days between and including Monday to Friday. This does not include federal holidays and weekends.

Calendar Day - Any day of the week.

Claims Without Conveyance of Title- A Claim Without Conveyance of Title (CWCOT) is a procedure under which the Mortgagee attempts to secure a third party purchaser for a mortgaged property so that the conveyance to HUD is not required in exchange for mortgage benefits.

Contractor - A supplier or vendor awarded a contract to provide specific supplies or service to the Government. The term used in this contract refers to the prime.

Contracting Officer (CO) - A person with authority to enter into, administer, and/or terminate contracts and make related determinations and findings on behalf of the Government. Note:

the only individual who can legally bind the Government.

Contracting Officer's Representative (COR) - An employee of the U.S. Government appointed by the Contracting Officer to perform contract administration activities in regard to technical issues. This individual has authority to provide technical direction to the Contractor as long as direction is within the scope of the contract, does not constitute a change and has no funding implications. This individual does NOT have authority to change the terms and conditions of the contract.

Conveyance Condition - The standards a property has to meet to be considered ready for conveyance. This includes but is not limited to basic components for habitability and occupancy such as adequate heating and cooling facilities, electrical supply, cooking facilities, hot and cold water supply, sanitary facilities and roof covering.

Cost Estimator Service - A comprehensive industry standard HUD provided cost estimator and valuation service designed to provide repair, replacement, or improvement costs to end users to effectively and efficiently estimate the cost of property preservation and repair. The estimator service contains validated and localized building cost, with web-based access.

Default - When a mortgagor fails to perform under any covenant of the mortgage and the failure continues for thirty days.

Deliverable Anything that can be physically delivered (including electronic deliverables) but may include non-manufactured things such as meeting minutes or reports.

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.

Fatal Edit Error – Are errors that cause the claim to be rejected. To remedy the fatal error, Mortgagee would need to address the errors if possible and resubmit the claim.

FHA Connection - An Internet-based system that provides FHA business partners and

Vendors 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 Vendor responsible for property management, maintenance, and preservation services.

Fiscal Year (FY) - The US government's official accounting year, which begins October 1 of the calendar year and ends on September 30 of the following calendar year.

Government Furnished Property (GFP) - Government-furnished property is property in the possession of, or directly acquired by, the Government and subsequently furnished to the

Contractor for performance of a contract. Government-furnished property includes, but is not limited to, spares and property furnished for repair, maintenance, overhaul, or modification.

Government-furnished property also includes contractor-acquired property if the contractor-acquired property is a deliverable under a cost contract when accepted by the Government for continued use under the contract.

Hard Edit Error – Are errors that suspend the claim, which may be resolved by the submission of information by the Mortgagee.

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.

HUD HECM System of Record - HUDs HECM System of Record is an Internet based system that serves as the primary system of record for all HECM case management transactions.

HUD REO System of Record (HRSR)- HUDs REO System of Record is an Internet based system that serves as the primary system of record for all REO case management transactions. This system identifies, collects and deposits each delinquent HUD-owned property and tracks the disposition activity from conveyance to sale. The system will also track pre-conveyance activities. This system integrates data from SFIS, FHA Connection, and SAMS

Accounting.

Mortgage - A lien on a project to secure construction advances or a permanent loan.

Mortgagee Compliance Manager Vendor responsible for the mortgagee compliance services as defined by HUD.

Mortgagee - The original mortgagee under a mortgage and its successors and assigns, which includes the holders of credit instruments issued under a trust indenture, mortgage, or deed of trust pursuant to which such holders act by and through a trustee therein named.

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 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).

Mortgagor - The original borrower under a mortgage and his heirs, executors, administrators and assigns.

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.

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.

Performance Requirements Summary (PRS) - A listing of the performance requirements under the contract that are to be evaluated by the Government on a regular basis, performance indicators for these requirements, performance standards for these requirement and surveillance methods to be used to determine if performance standards are met.

Performance Standard - The Contractor's performance level required by the Government.

Performance Work Statement (PWS) - A statement of work for performance-based acquisitions that describe the required results in clear, specific and objective terms with measurable outcomes.

Pre-Foreclosure Sale (PFS) - Also known as a Short Sale, refers to the sale of real estate that generates proceeds that are less than the amount owed on the Property and in which the lien holders agree to release their liens and forgive the deficiency balance on the real estate.

Post Conveyance - Activities associated with a property after it has been conveyed to HUD.

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

Quality Assurance (QA) - Policies and procedures adopted by the Government to ensure that supplies and services acquired under Government contracts conform to the contracts quality requirements.

Quality Assurance Surveillance Plan (QASP) - A plan describing how the agency will survey, observe, test, sample, evaluate and document the Contractor's performance in meeting critical performance standards identified in the contract.

Quality Control (QC) - All necessary measures taken by the Contractor to assure that the quality of an end product of service shall meet contract requirements.

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.

Reacquisition - The process by which a Mortgagee conveys to HUD a property that has been previously reconveyed to the Mortgagee.

Re-conveyance - 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.

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 properties acquired by HUD.

Single Family Insurance System (SFIS or A-43C) The Single Family Insurance System

(SFIS) is a HUD system of record used to maintain the insurance-in-force (IIF) database, which contains accurate and detailed case information on FHA insured single family properties (except HECM). The Contractor shall access SFIS to verify loan information as deemed necessary to determine insurance status and claims information.

Soft Edit Error - Are errors to the claim that do not stop payment of the claim (claim does not suspend). They may consist of errors that the Mortgagee can fix but does not affect the payment of the claim.

Subcontractor - Any person, other than the prime Contractor, who offers to furnish or furnishes any supplies, material, equipment, or services of any kind under a prime contract or a subcontract entered into in connection with such prime contract, and any person who offers to furnish or furnishes general supplies to the prime contractor or a higher tier subcontractor. The

Government does not have privity of contract with a subcontractor.

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.

2.2 Acronyms

AM - Asset Manager

AQL - Acceptable Quality Level

BPO - Broker Price Opinion

CAFMV - Commissioners Adjusted Fair Market Value

CFR - Code of Federal Regulations

CO - Contracting Officer

COOP - Continuity of Operations Plan

COR - Contracting Officer Representative

COS – Contract Oversight Specialist

CWCOT - Claim Without Conveyance of Title

DOA - Delegation of Authority

FHA - Federal Housing Administration

FOIA - Freedom of Information Act

FSM - Field Service Manager

HECM - Home Equity Conversion Mortgage

HPIR - HUD Property Inspection Report

HOA - Homeowners Association

HRSR - HUD REO System of Record

HSFDS - HUD Single Family Disposition Systems

HUD - U.S. Department of Housing and Urban Development

HUDCLIPS - HUD's Client Information Policy System

MCM - Mortgagee Compliance Manager

NSC - National Servicing Center

OA - Over-allowable

OSFAM - Office of Single Family Asset Management

P&P - Preservation and Protection

PFS – Pre-Foreclosure Sale

PRS - Performance Requirement Summary

PWS - Performance Work Statement

QA - Quality Assurance

QASP - Quality Assurance Surveillance Plan

QC - Quality Control

QCD - Quitclaim Deed

QCP - Quality Control Plan

REO - Real Estate Owned

SAMS - Single Family Acquired Asset Management System

SFDMS - Single Family Default Monitoring System

SFIS or A43C - Single Family Insurance System

3 Government-Furnished Property and Services

The Contractor shall ensure accurate control and accountability of all Government-Furnished

Property in accordance with the terms and conditions of this contract. The Government will furnish, at no cost to the Contractor, the GFP shown below.

3.1 Government Services

Within 15 business days after contract award, the Government will provide virtual training to the

Contractor’s key personnel on the HUD’s HECM System of Record, FHA Connection and SFIS.

3.2 Facilities

Government facilities will not be provided.

3.3 Equipment

Government equipment will not be provided.

3.4 Materials and Information

See HUDAR 2452.227-70, Government Information

The Government will provide the Contractor user access privileges to the SFIS, FHA

Connection, HUD’s HECM System of Record, HRSR, and SAMS. User access privileges will be granted upon successful completion of required background/security investigations administered by the Government.

Copies of required materials will be provided to the Contractor in hard copy or soft copy within

15 days of contract award. All furnished materials will remain the property of the Government and will be returned to the COR upon request or at the end of the contract period. The following materials will be provided:

HRSR Instruction Guidebooks

HUD’s HECM System of Record Instruction Guidebooks

3.5 Quality Assurance (QA)

The Government shall evaluate the Contractor's performance under this contract in accordance with the Quality Assurance Surveillance Plan. This plan is primarily focused on what the

Government must do to ensure that the Contractor has performed in accordance with the performance standards. It defines how the performance standards will be applied, the frequency of surveillance and the minimum acceptable quality level.

4 Contractor-Furnished Items and Services

The Contractor shall furnish, all facilities, equipment and supplies required to perform the work under this contract that are not listed under Government-Furnished Property and Services.

4.1 Facilities

The Contractor shall furnish all facilities required to perform the services stated within the

PWS.

4.2 Equipment

The Contractor shall furnish all equipment required to perform the services stated within the

PWS.

4.3 Materials

The Contractor shall furnish all materials not provided by the Government that are required to perform the services stated within the PWS.

4.4 Contractor Responsibilities

The Contractor shall only conduct business with designated Government personnel listed as points of contact (POCs). Names of authorized personnel shall be provided to the Contractor by the Government, in writing and updated as necessary throughout the contract period of performance.

U.S. Government records, copies of original results and reports, verified original data, corrected data and corrected supporting final reports which are maintained by the Contractor remain the property of the U.S. Government. These files/results must be surrendered to the COR.

4.5 Contractor Personnel

See HUDAR clause 2452.237-70 - Key Personnel in the Key Personnel section of the contract.

4.6 Identification of Contractor Employees

All Contractor/subcontractor personnel shall wear company picture identification badges as to distinguish themselves from Government employees. When conversing with Government personnel during business meeting, over the telephone or via electronic mail, Contractor/subcontractor personnel shall identify themselves as such to avoid situations arising where sensitive topics might be better discussed solely between Government employees.

Contractors/subcontractors shall identify themselves on any attendance sheet or any coordination documents they may review. Electronic mail signature blocks shall identify their company affiliation. Where practicable, Contractor/subcontractors occupying collocated space with their Government program customer shall identify their workspace area with their name and company affiliation, or at a minimum, "Contractor” after name.

5 Specific Tasks

5.1 Pre-Conveyance Activities

The Contractor shall provide pre-conveyance services for HUD FHA properties. All services shall be provided in accordance with the procedures outlined in HUD Handbook 4000.1, 24

CFR Part 17, and 24 CFR Part 203 as listed in section 1.3 Constraints of the PWS. Services shall include:

Extensions of Time Requests Over-Allowable Requests Occupied Conveyance Surchargeable Damages

The Contractor shall use HRSR to complete all services except for HECM over-allowables.

HECM over-allowables shall be completed in HUD’s HECM System of Record. HSRS and HUD’s HECM System of Record instructions and user guides will be provided as indicated in section 3.4 Materials and Information of the PWS.

5.1.1 Extension of Time Requests

The Contractor shall review and process mortgagee requests for extension of time and CWCOT extension of time requests within five (5) business days following receipt of a request.

The day the request is submitted in HRSR counts as the first business day to complete the review. The Contractor shall review the request in HRSR and either approve or deny the extension requests in accordance with the applicable regulations, guidance, and procedures outlined in HUD Handbook 4000.1.

The Contractor shall notify the Mortgagee within five (5) business days from receipt of the request explaining the reasons why the extension request was approved or denied. If the Contractor grants an initial extension of time, and the Mortgagee requires additional time, the Contractor shall review the subsequent extension requests. Extensions shall not be granted for more time than required to complete the actions for conveyance or CWCOT. The Contractor shall process and may approve requests for a total of no more than 90 calendar days for conveyance and 120 calendar days for CWCOT. After the 90 calendar days for conveyance and 120 calendar days for CWCOT have been approved by the Contractor, HRSR automatically sends additional extension requests to the COR for review.

5.1.1.1 Appeal of Extension Denial

The Contractor shall review appeals of extension denial within three (3) business days of receipt of request and make a final determination. The day the request is submitted in HRSR counts as the first business day to complete the review. The Contractor shall notify the Mortgagees explaining why the extension appeal request was approved or denied in accordance with the applicable regulations, guidance, and procedures outlined in HUD Handbook 4000.1. Mortgagees’ have five (5) business days from the date of denial to submit an extension of time request for reconsideration. If an appeal for extension request is received after the fifth (5) business day, the Contractor shall still process the appeal and make a final determination for extension within three (3) business days of receipt of request.

5.1.2 Over-Allowable Requests

The Contractor shall review and process over-allowable requests for CWCOT, Forward Mortgages, and HECM. The Contractor shall approve or deny the requested expenses within five (5) business days of receipt of request. The day the request is submitted in HRSR counts as the first business day to complete the review. The Contractor’s notification to the Mortgagee of the approval or denial, within the previously stated time frame, shall explain the reasons why the over-allowable request was approved or denied.

The Contractor shall evaluate all requests for reimbursement to determine if the request is reasonable and justifiable. The Contractor shall determine costs using HUD provided cost estimator service. If the Contractor determines that the expenses are not justified, the Contractor shall deny the request in accordance with applicable regulations, guidance, and procedures outlined in HUD Handbook 4000.1.

Performance Standards:

a) Standard:100% of over-allowable requests for CWCOT, and Forward Mortgages are reviewed and processed within five (5) business days of receipt of request.

AQL: 95% of over-allowable requests for CWCOT, and Forward Mortgages are reviewed and processed within five (5) business days.

5.1.2.1 Over-Allowable Requests – HECM Property Demolition

The Contractor shall review and process over-allowable requests for HECM property demolition within five (5) business days of receipt of the request. The Contractor shall review each request to verify costs using HUD provided cost estimator service and note any issues found in the HECM System of Record. The Contractor shall process and submit over-allowable HECM property demolition request to the COR for approval if the Contractor determines the costs associated with the request are reasonable and finds no additional issues (e.g., mortgagee neglect). If the Contractor determines the cost associated with the request are not reasonable then the contactor shall deny the request. The Contractor decision shall state the reasons and justification for an approval or denial. Final HECM property demolition decisions are made by HUD utilizing the Contractor’s recommendations.

5.1.2.2 Appeal of Over-Allowable

The Contractor shall review and approve or deny Appeals of Over-Allowable within three (3) business days of receipt of request in accordance with applicable regulations, guidance, and procedures outlined in HUD Handbook 4000.1. The day the appeal is submitted in HRSR counts as the first business day to complete the review. Mortgagees have five (5) business days from the date of denial to submit an over-allowable appeal request for reconsideration. If an appeal for an over-allowable request is received after the fifth business day, the Contractor shall still process the appeal within three (3) business days.

5.1.3 Occupied Conveyance

The Contractor shall process all requests (received by mail or email) for occupy conveyance within 30 calendar days of receipt. The Contractor shall upload into HRSR all documentation including date stamped envelopes for each occupied conveyance request. The requests shall be evaluated in accordance with 24 CFR Part 203.670 Conveyance of Occupied Property through 24 CFR Part 203.680 Approval of Occupancy After Conveyance and HUD Handbook

4000.1 Occupied Conveyance.

The Contractor shall request that the FSM conduct an inspection within 48 hours after receipt of occupied conveyance to determine whether the property is habitable, free of lead-based paint hazards, and free of evidence that a hazardous substance was stored for one year or more, or known to have been released, or disposed of at the property. The Contractor shall deny or recommend approval to the COR based on its review of the occupied conveyance requests. The Contractor shall not recommend occupied conveyance of properties containing lead-based paint hazards occupied by children under seven (7) or occupied conveyance of any property with evidence of hazardous substances as described above. The Contractor shall notify the occupant by certified letter and the Mortgagee via email within three (3) business days of the occupied conveyance decision. Approval from the COR shall be obtained to grant occupied conveyance or permit continued occupancy in cases where occupied conveyance is in the best interest of HUD as defined in the above CFR and HUD regulations.

5.1.3.1 Occupied Conveyance – Appeals

If the occupied conveyance is denied, the occupants may request an informal conference with the Contractor or appeal the decision in writing or both. The Contractor shall set up an informal conference with the occupant if they receive a request in writing within 10 business days after the denial notice. The Contractor shall review written appeals that are received (either via mail or email) within 20 business days of the denial notice. If an occupant or its representative requests to review relevant material that formed the basis for a denial, the Contractor shall make the material available for review and provide, at no cost, a copy of the material.

Contract employees who engaged in the initial occupied conveyance decision shall not participate in the appeal process other than to provide pertinent information or evidence.

The Contractor shall send a final notice of determination to the occupant and the

Mortgagee within five (5) business days of making their final decision.

5.1.4 Surchargeable Damage – Pre-conveyance

The Contractor shall review and approve or deny Mortgagee surchargeable damage pre-conveyance requests within five (5) business days of receipt of the request. Damages to property caused by fire, flood, earthquake, tornado, hurricane, boiler explosion (for condominiums only), or Mortgagee neglect shall not be approved for surchargeable damage and are the responsibility of the Mortgagee. The Contractor may deny requests for surchargeable damages over $2,500 but cannot approve a request over this limit.

If the Contractor determines approval and the Mortgagees cost to repair estimate for surchargeable damage exceeds $2,500, the Contractor shall use the HUD provided cost estimator service to obtain an independent cost estimate and verify the mortgagee cost. The Contractor shall upload a copy of the cost estimate in HRSR along with their findings and recommendations. The Contractor shall submit a summary of their findings and recommendations for the surchargeable damage approval to the COR in HRSR within five (5) business days of receipt of the request. Upon receipt of the COR decision, the Contractor shall notify the Mortgagee within five (5) business days of receipt.

5.1.4.1. Surchargeable Damage – Pre-foreclosure Sale (PFS)

For property with surchargeable damages, Mortgagee must get NSC approval for the property to be eligible for the PFS program. Upon receipt of the request for the PFS program, the Contractor shall provide to the COR a government cost estimate to repair the damage using the HUD provided cost estimator service within five (5) business days.

5.1.5 Continuity of Operations Plan (COOP)

The Contractor shall create and submit a draft COOP to the COR for review and approval within 10 business days after contract award. The COOP shall outline steps and communication strategy necessary to ensure that all essential business functions under the contract proceed without interruption in the case of an emergency or crisis requiring relocation of the Contractor's office and other resources. At a minimum, the COOP shall include:

Detailed listing of contract and hosting services, Alternative resources and processes, Steps to immediately relocate offices and personnel, Disaster recovery plan, Test plan (in the case of the pandemic or any possible resurgence) and

Any other pertinent information necessary to support the continuity of the contract in an emergency/crisis.

At a minimum, the COOP shall address:

Subcontractor default, Employee strike, Civil disorder, Power outages, Weather Emergency, Natural disaster, Computer viruses, Information piracy, Actual or suspected security breaches, and

Major equipment or server failure impacting system performance.

The Contractor shall submit a final COOP no later than five (5) business days after receipt of

COR comments, and review and update annually thereafter for changes. Upon COR’s approval, the Contractor shall execute and maintain the approved COOP. Changes to the

COOP shall be submitted in writing to the COR for approval before implementation.

Performance Standards:

a) Standard: Draft COOP submitted to the COR for review and approval within 10 business days after contract award.

AQL: Five (5) business days deviation from standard.

b) Standard: Final COOP incorporates 100% of the requested information.

AQL: Zero deviation

Deliverables A001 Draft COOP A002 Final COOP

5.2 Post Conveyance Activities

The Contractor shall provide post conveyance services for HUD FHA properties. All services shall be provided in accordance with the procedures outlined in HUD Handbook 4000.1, 24 CFR Part 17, and 24 CFR Part 203 as listed in section 1.3 Constraints of the PWS. Services shall include:

Claim Reviews Title Evidence Review and Approval Voluntary Deed Execution Administrative Remedies Reporting Document Administration Customer Service

The Contractor shall use HRSR to record and complete all services.

5.2.1 Part A Claim Review

The Contractor shall review and ensure the accuracy of Part A of HUD Form 27011 and supporting documentation for all Mortgagee conveyance and CWCOT claim applications and that they comply with HUD conveyance and CWCOT requirements outlined in HUD Handbook

4000.1 Section IV – Claims and Disposition. The Contractor shall address all discrepancies in writing to the Mortgagee no later than 30 calendar days of receipt of a claim application.

5.2.1.1 Part A Claim Review – Acquisition Verification

The Contractor shall verify the acquisition of HUD properties in accordance with the regulations outlined above for verification of proper acquisition. The Contractor shall verify Part A of HUD

Form 27011 acquisition information resulting from an insurance claim, by accessing the SFIS to verify that the loan was insured and should be conveyed. For acquisitions that were the security for a FHA insured mortgage, the Contractor shall verify a property address, Mortgagee name, address, and telephone number.

If the Contractor receives information showing the property has been conveyed to HUD such as a tax bill or a property violation notice (not an exhaustive list) and the claim information is not in HRSR, the Contractor shall contact the Mortgagee and request Part A of HUD Form 27011 claim and all supporting documentation to be uploaded into HRSR.

5.2.1.2 Part A Claim Review – Occupancy, Damages, and Property Expenses

The Contractor shall review Part A of HUD Form 27011 for the Mortgagee’s claimed occupancy status, damage, payment of property taxes, and other expenses such as HOA fees in accordance with HUD Handbook 4000.1 Section IV Claims and Disposition, and any subsequent policy directive. The Contractor shall use HUD Property Inspection Report (HPIR) Initial Inspection Form, BPO/appraisal data, and all additional pertinent information containing the condition and maintenance history of the property to compare the information provided by the Mortgagee on Part A of HUD Form 27011 to the results of the initial property inspection to verify occupancy and damages.

5.2.1.3 Part A Claim Review – Soft, Hard, and Fatal Edit Errors

The Contractor shall review Part A of HUD Form 27011 for soft edits, hard edits, and fatal suspension codes. All hard edits and fatal suspension codes must be corrected by the Mortgagee before the property can advance to Step 1: Acquisition of the REO process in HRSR (see Appendix B - REO steps in HRSR for details). The soft edit and hard edit reviews can occur concurrently. Reviews are categorized as follows:

Soft Edit Error Reviews- The Contractor shall review and identify soft edit errors for the Mortgagee to correct those errors. If the Mortgagee corrects those errors, the Contractor shall verify the corrections and manually advance the claim to Step One (1).

Hard Edit Error Reviews - The Contractor shall review all hard edit errors within five (5) calendar days of receipt of request and notify the Mortgagee of any problem by certified mail and email. Mortgagees’ have 60 calendar days from receipt of notification to resolve all hard edit errors. If the hard edit errors are not resolved within 60 calendar days, the Contractor shall quit claim deed (QCD) the property back to the Mortgagee and notify the Mortgagee within 24 hours that the property has been quit claimed back into the Mortgagee’s name.

Fatal Edit Error Reviews - If a fatal edit error occurs, the Contractor shall QCD the property back to the Mortgagee within 48 hours. The Contractor shall then record the QCD and notify the Mortgagee within 24 hours that the property has been QCD back into the Mortgagee’s name.

5.2.1.4 Part A Claim Review – Occupied Property

The Contractor shall verify the property is vacant at the time of conveyance unless the Contractor has already approved the property for occupied conveyance. The FSM on their initial inspection of the property will determine if the property is occupied and notify the Contractor. If the Contractor determines that the property was occupied at conveyance without prior permission from HUD, the Contractor shall reconvey the property back to the Mortgagee.

5.2.1.5 Part A Claim Review – Conveyance with Property Damage

The Contractor shall review Part A of HUD Form 27011, Item 24: Is Property Conveyed Damaged? If marked yes, the Contractor shall process the conveyance in accordance with the procedures outlined below.

Surchargeable Damage Conveyance Approved: The Contractor shall review and verify that surchargeable damage was previously approved for the property. The Contractor shall check to ensure that the correct approval date was entered and that the correct damage amount was entered on Part A of HUD Form 27011. The Contractor shall also compare the extent of the damage claimed by the Mortgagee to their initial inspection information and all previously conducted estimates of repair costs in HRSR to ensure that the extent of the damage and cost to repair is not greater than the amount claimed in the request to convey the property damaged.

Surchargeable Damage Conveyance Not Approved - If a property is conveyed with surchargeable damage without prior approval, the Contractor shall develop a government cost estimate. The Contractor shall use HUD provided cost estimator service to determine the amount required to repair the damage and initiate the debt collection process for the estimated repair and any amounts claimed by the Mortgagee for any work resulting from the Contractor’s estimate within 30 calendar days of receipt of a claim application. For reference, the debt collection process is outlined in section 5.2.8 Administrative Remedies of the PWS.

Limitation on Fire Damage: If a property is conveyed with fire damage without prior approval, the Contractor shall check if the Mortgagee has entered the date of its certification letter in Item 25(b) of Part A of HUD Form 27011. Item 25(b) of Part A of HUD Form 27011indicates the Mortgagee’s liability for fire damage is limited to the amount of its insurance recovery. The Contractor shall insure all proceeds from the insurance company are obtained by the Mortgagee and applied to the claim. Any insurance funds due but not collected by the Mortgagee, shall be the Mortgagee’s responsibility and deducted from the Mortgagee claim amount.

The Contractor shall assess the Mortgagee liability limitation and check Item 119 of Part B of HUD Form 27011 if 24 CFR Part 203.379(a)(2)(i-v) applies. The Contractor shall determine if the actual insurance recovery amount differs from the estimates given in Item 27 of Part A of HUD Form 27011. The Contractor shall deduct the difference in cost under Column A of Part B of HUD Form 27011 if the actual insurance recovery amount is more than the estimate. If the actual insurance recovery amount is less than the estimate, the Contractor shall add the difference under Column B of Part B of HUD Form 27011. The Contractor shall collect any funds owed to HUD.

5.2.1.6 Part A Claim Review – Property Conveyed with Non-Surchargeable Damage

The Contractor shall review Part A of HUD Form 27011, attachments, and all supporting documentation including evidence showing that the damage was not surchargeable damage. If a property has sustained non-surchargeable damage the Mortgagee is not required to obtain pre-approval for conveyance. The Contractor shall review the supporting documentation to determine if there was mortgagee neglect or surchargeable damage as described below:

Letter to Mortgagee: The Contractor shall notify the Mortgagee in writing that the Mortgagee has ten 10 calendar days to provide information indicating that property has not sustained surchargeable damages if:

1. The Mortgagee fails to provide the required explanation in the Mortgagees Comments sections of Part A of HUD Form 27011.

2. Or the Mortgagee fails to provide documentation that the damage was non-surchargeable.

3. Or the Mortgagee fails to provide documentation that they have preserved and protected the property.

Incomplete documentation provided by the Mortgagee from the letter above: If the Mortgagee provides the information and the Contractor determines that the damage is surchargeable, the Contractor shall within 30 calendar days of receipt of a claim application assess the extent of the damage and shall either immediately contact the COR via HRSR and recommend re-conveyance or proceed with the debt collection process outlined in section 5.2.8 Administrative Remedies of the PWS. The Contractor shall collect an amount equal to the insurance payment or the government estimated cost to repair the damages, whichever is greater.

No documentation provided by the Mortgagee from the letter above: The Contractor shall determine the damage is surchargeable if no documentation is received from the Mortgagee.

The Contractor shall within 30 calendar days of receipt of a claim application assess the extent of the damage and either contact the COR via HRSR recommending re-conveyance or proceed with the debt collection process outlined in section 5.2.8 Administrative Remedies of the PWS.

The Contractor shall collect an amount equal to the insurance payment or the government estimated cost to repair the damages, whichever is greater.

5.2.2 Parts B and C Claim Review

The Contractor shall review and ensure the accuracy of Part B and C of HUD Form 27011 and supporting documentation for all Mortgagee conveyance and CWCOT claim applications and that they comply with HUD conveyance and CWCOT requirements outlined in HUD Handbook

4000.1 Section IV – Claims and Disposition. The Contractor shall address all discrepancies in writing to the Mortgagee within 30 calendar days of receipt of a claim application; including accessing HUD claim system to determine if payment was made for over-allowables.

5.2.2.1 Parts B and C Review – Claimed Expenses Completed

The Contractor shall review and verify that claimed expenses are completed and validated by the supporting documentation. The Contractor shall determine if claim expenses are over the allowable property and preservation (P&P) thresholds and that an over-allowable request was approved. To make this determination, the Contractor shall, at a minimum, compare the information on Parts B and C of HUD Form 27011 to the information on the Property

Conveyance Inspection Report (sections 1-13 of the Initial Inspection Report), lender inspection reports, photos, appraisal reports for the property and to the approved over-allowable requests.

5.2.2.2 Parts B and C Review – Claimed Expenses Not Completed

The Contractor shall initiate actions to collect overpayments of expenses paid within 30 calendar days of receipt of a claim application as outlined in the debt…