3 5 Solicitation - Final.docx

R-ATL-02006

Asset Manager - 3S, 4S, 5S, 6S, 4D and 5D

PART I – THE SCHEDULE

SECTION B – SUPPLIES OR SERVICES AND PRICE/COSTS

B.1 CONTRACT DEFINITION – INDEFINITE DELIVERY/INDEFINITE QUANTITY

This is a single award Indefinite Delivery Indefinite Quantity contract as defined in Section 16.504 of the Federal Acquisition Regulation (FAR) and in Section I.5, FAR Clause 52.216-22. Services or supplies provided by the contractor under this contract shall be secured by the issuance of delivery orders (for supplies) or task orders (for services). Orders shall be placed in accordance with the following clauses: FAR 52.216-18, Ordering; FAR 52.216-19, Order Limitations; and with [ ] Delivery Ordering Procedures, or [X] Task Ordering Procedures, HUDAR 2452.216-78, Ordering Procedures. The contract minimum and maximum quantities available for order are specified in HADAR 2452.216-76, Minimum and Maximum Quantities and Amounts for Order.

B.2 SERVICES

The services required in this RFP are being solicited on a 100% Total Small Business Set-Aside basis, under the NAICS code 541611, General Management Consulting, with an established Small Business size standard of $7M in average annual revenues (see Section K).

The selected offeror(s) will serve as the Asset Management (AM) contractor(s) in accordance with the Performance Work Statement (PWS) for the geographic areas identified in Section B.5.

B.3 PERFORMANCE PERIOD

The resulting contracts will have a base performance period of one (1) year, plus four (4) one year option periods. The length of the contract, including the option periods, shall not exceed five (5) years from either the effective date or date of contract award, whichever is later.

Contract Areas 3S, 4S, 5S and 6S are anticipated to begin directly after contract award. However, depending upon available ceiling under the existing 3D AM Contract, it is possible that the effective date for contract areas 4D and 5D may be pushed out until later in FY 2012.

B.4 PRICING

The selected offeror to support the Office of Single Family Asset Management Division, in accordance with the Performance Work Statement (PWS), Section C, will be paid the firm fixed price listed in the Section B Price Schedule for each of the CLINS identified. Invoicing and voucher submission shall be in accordance with Section G.

Offerors may submit pricing and technical proposals for any or all of the solicited Homeownership Geographic Contract Areas identified in the Solicitation. Proposals must cover all Contract Line Items (CLINS) within a Contract Area. Contractors proposing multiple contract areas must submit a single proposal, as specified in Section L. If an Offeror proposes multiple contract areas, each area will be evaluated based on its own merit.

Marketing Fee:

The selected AM offeror’s Marketing Fee is paid on a percentage fee basis. The fee is paid for completion of requirements in the PWS and includes those requirements specifically identified in Section 5.2 such as the three required inspections, listing broker fees, and overseeing the closing process. The fee is calculated as a percent of the Net Offer amount.

Non-ACA Marketing Fee CLINs

Example of how the non-ACA marketing fee is calculated:

Net Offer Amount x marketing percentage = n-ACA marketing fee

ACA Marketing Fee

Example of how the ACA marketing fee is calculated:

Appraised Value x .50 x marketing percentage = ACA marketing fee

GTR Directed Inspections

Government Technical Representative (GTR) directed inspections and fees for conducting the special inspections requested by GTR. This fee does not include the selected AM Offerors’ required marketing inspections: 1) Initial, 2) Prior to List, and Ready to Close. These marketing inspections are included in the marketing percentage fee. The GTR Directed Inspections CLIN covers inspection beyond those required to market the property and are specifically directed by the GTR.

Pass-Through Expenses

All costs to complete the requirements of the PWS are included in the CLIN fee (marketing percentage or unit price) unless specified as a reimbursement. The following costs will be reimbursed to the selected Offeror for the actual costs incurred.

· Appraisal Fee – The actual cost (up to a maximum of $350) for the first appraisal (used to determine list price). HUD will not reimburse for 2nd or updated appraisals.

· Record Retention, Exit File Delivery – The actual cost of shipping files and for the boxes for records will be reimbursed by HUD.

· Post Closing Complaints – actual amounts paid by the selected Offeror to resolve post-closing complaints when approved in advance by the GTR.

B.5 GEOGRAPHIC AREAS:

Homeownership Center Contract Area 3S: Arizona

Contract Line Item

(CLIN)

Task Order Period Marketing Fee

CLIN 3S01: non-ACA Property has sold and closed within 90 days of assignment and sale price is, at a minimum, 95% of initial list price

CLIN 3S02: non-ACA Property has sold and closed within 90 days of assignment but sale price is less than 95% of initial list or property sold and closed on day 91 or later of assignment at any sale price relative to initial price

CLIN 3S03: ACA Property

Contract Line Item

CLIN 3S11

GTR Directed Inspections – Base Year

Each

CLIN 3S12

GTR Directed Inspections – Option Year 1

CLIN 3S13

GTR Directed Inspections – Option Year 2

CLIN 3S14

GTR Directed Inspections – Option Year 3

CLIN 3S15

GTR Directed Inspections – Option Year 4

Pass Through Expenses (Performance Work Statement Attachment A5):

Contract Line Item

(CLIN)

Contract Line Item

Contract Line Item

Homeownership Center Contract Area 4S: Idaho and Nevada

Contract Line Item

CLIN 4S01: non-ACA Property has sold and closed within 90 days of assignment and sale price is, at a minimum, 95% of initial list price

CLIN 4S02: non-ACA Property has sold and closed within 90 days of assignment but sale price is less than 95% of initial list or property sold and closed on day 91 or later of assignment at any sale price relative to initial price

CLIN 4S03: ACA Property

Contract Line Item

CLIN 4S11

GTR Directed Inspections – Base Year

CLIN 4S12

GTR Directed Inspections – Option Year 1

CLIN 4S13

GTR Directed Inspections – Option Year 2

CLIN 4S14

GTR Directed Inspections – Option Year 3

CLIN 4S15

GTR Directed Inspections – Option Year 4

Contract Line Item

(CLIN)

Contract Line Item

Contract Line Item

Homeownership Center Contract Area 5S: California, Hawaii, Guam, Northern Mariana Islands, and American Samoa

Contract Line Item

CLIN 5S01: non-ACA Property has sold and closed within 90 days of assignment and sale price is, at a minimum, 95% of initial list price

CLIN 5S02: non-ACA Property has sold and closed within 90 days of assignment but sale price is less than 95% of initial list or property sold and closed on day 91 or later of assignment at any sale price relative to initial price

CLIN 5S03: ACA Property

Contract Line Item

CLIN 5S11

GTR Directed Inspections – Base Year

CLIN 5S12

GTR Directed Inspections – Option Year 1

CLIN 5S13

GTR Directed Inspections – Option Year 2

CLIN 5S14

GTR Directed Inspections – Option Year 3

CLIN 5S15

GTR Directed Inspections – Option Year 4

Contract Line Item

(CLIN)

Contract Line Item

Contract Line Item

Homeownership Center Contract Area 6S: Oregon, Washington, and Alaska

Contract Line Item

CLIN 6S01: non-ACA Property has sold and closed within 90 days of assignment and sale price is, at a minimum, 95% of initial list price

CLIN 6S02: non-ACA Property has sold and closed within 90 days of assignment but sale price is less than 95% of initial list or property sold and closed on day 91 or later of assignment at any sale price relative to initial price

CLIN 6S03: ACA Property

Contract Line Item

CLIN 6S11

GTR Directed Inspections – Base Year

CLIN 6S12

GTR Directed Inspections – Option Year 1

CLIN 6S13

GTR Directed Inspections – Option Year 2

CLIN 6S14

GTR Directed Inspections – Option Year 3

CLIN 6S15

GTR Directed Inspections – Option Year 4

Contract Line Item

(CLIN)

Contract Line Item

Contract Line Item

Homeownership Center Contract Area 4D: Iowa, Nebraska, South Dakota, and Wisconsin

Contract Line Item

CLIN 4D01: non-ACA Property has sold and closed within 90 days of assignment and sale price is, at a minimum, 95% of initial list price

CLIN 4D02: non-ACA Property has sold and closed within 90 days of assignment but sale price is less than 95% of initial list or property sold and closed on day 91 or later of assignment at any sale price relative to initial price

CLIN 4D03: ACA Property

Contract Line Item

CLIN 4D11

GTR Directed Inspections – Base Year

CLIN 4D12

GTR Directed Inspections – Option Year 1

CLIN 4D13

GTR Directed Inspections – Option Year 2

CLIN 4D14

GTR Directed Inspections – Option Year 3

CLIN 4D15

GTR Directed Inspections – Option Year 4

Contract Line Item

(CLIN)

Contract Line Item

Contract Line Item

Homeownership Center Contract Area 5D: Montana, Minnesota, North Dakota, and Wyoming

Contract Line Item

CLIN 5D01: non-ACA Property has sold and closed within 90 days of assignment and sale price is, at a minimum, 95% of initial list price

CLIN 5D02: non-ACA Property has sold and closed within 90 days of assignment but sale price is less than 95% of initial list or property sold and closed on day 91 or later of assignment at any sale price relative to initial price

CLIN 5D03: ACA Property

Contract Line Item

CLIN 5D11

GTR Directed Inspections – Base Year

CLIN 5D12

GTR Directed Inspections – Option Year 1

CLIN 5D13

GTR Directed Inspections – Option Year 2

CLIN 5D14

GTR Directed Inspections – Option Year 3

CLIN 5D15

GTR Directed Inspections – Option Year 4

Contract Line Item

(CLIN)

Contract Line Item

Contract Line Item

B.6 ORDERING

Written Task Orders for this service contract will be issued on a quarterly basis, in accordance with Section C, Paragraph 1.4. Individual assignment of assets will be recorded electronically in HUD’s P260 system. Individual asset “orders” will be considered placed upon electronic assignment of assets through the step movement process into a status of “Ready to List.” Authorized Ordering Officials include the Contracting Officer (CO) and the Government Technical Representative (GTR). It should be noted that GTR’s cannot negotiate or change any pricing or terms/conditions of this contract without the express consent of the Contracting Officer.

SECTION C: DESCRIPTION/SPECIFICATIONS

Table of Contents

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 marketing support associated with 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 loans they finance for the purchase, and in some instances rehabilitation, of single-family homes. 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 2009 and 2010, the Department sold 68,273 and 87,709 single-family homes, respectively.

HUD administers the REO disposition program through four Homeownership Centers (HOC) located in: Philadelphia, Pennsylvania; Atlanta, Georgia; Denver, Colorado; and Santa Ana, California (see Attachment A1 – Homeownership Center Geographic Areas). Each HOC is responsible for a designated geographic area. This competition will only be for 6 areas – 3S,4S, 5S, 6S, 4D, and 5D – See map in Section J.

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 single entities 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 expired 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 the results of that market research, HUD began awarding new M&M III contracts in June 2010 through the present. M&M III includes a new disposition structure for the management and marketing of REO inventory that was intended to streamline HUD’s operations, capitalize on the expertise of its potential Contractors, and provide flexibility to meet changing market conditions in the real estate owned (REO) industry.

The key elements of the disposition structure include:

1. 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.

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

1. 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 three (3) 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:

1. Mortgagee Compliance Manager (MCM)

1. Asset Manager (AM)

1. Field Service Manager (FSM)

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

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 this contract.

Field Service Manager (FSM)

Field Service Managers (FSM) 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. Properties acquired by HUD will be assigned to FSMs as discussed in Section 1.4.

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

At the onset of M&M III, HUD established ten (10) geographical areas nationwide (see map in Attachment A1). For purposes of this solicitation, the map defining those areas has been amended to breakout the existing 1S, 2S, and 3D areas into smaller areas: 4S, 5S, 6S, 4D and 5D. Additionally, the government intends to award a single contract in each of the geographical areas rather than multiple awards in each area. Property assignments will begin during the Ramp-up phase of the transition period (See Section 6.2, Ramp-up). During this phase, HUD will begin to assign new acquisitions and transfer unsold inventory and pending contracts to the Contractors.

1.5 GEOGRAPHICAL 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 areas and the M&M Acquisition Center in Atlanta, Georgia. The program area administration will be as follows:

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

1. AM/FSM – Designated Homeownership Centers

1.6 PURPOSE AND OBJECTIVES FOR THE ASSET MANAGER

The purpose of this performance based contract is to obtain marketing and sales services for HUD’s REO properties. Multiple Asset Managers (AMs) shall be contracted to market and sell HUD Owned Properties within the geographic areas identified in Attachment A1. The government anticipates maintaining twenty (20) to thirty (30) contracts throughout the country to perform the required AM Services. Properties acquired by HUD will be assigned to AMs as discussed in Section 1.4.

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

HUD has identified five primary objectives for its Asset Managers. They are to ensure that:

1. Properties are accurately and competitively valued.

1. Sales achieve the highest net return.

1. Holding time is minimized.

1. Sales create owner-occupant opportunities.

1. Closing proceeds are properly accounted for and delivered to HUD in a timely manner.

This requirement will require interaction with existing and future HUD Contractors, homebuyers, investors, the real estate industry, nonprofit housing and advocacy organizations, Federal, state and local governments and HUD staff. It will also be affected by changes in regulation, legislation, or housing policy initiatives identified by the White House or the HUD Secretary. The Contractor shall be aware of, and incorporate in its operating procedures, any and all changes to applicable legislation, regulation and policy. Additionally, the Contractor shall be aware of the incorporation of contract clause FAR 52.243-1 - Changes - Fixed Price, Alternate I. The Contractor shall inform the GTR no later than thirty (30) days from the effective date of any change in regulation, legislation, or housing policy initiative that impacts contract performance.

2 ABBREVIATIONS, DEFINITIONS, ACQUISITION TYPES

2.1 ABBREVIATIONS

ABBREVIATIONS

Definition

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 Quote (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, 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 Payment Request 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.

Hard to Sell - “hard to sell” properties are defined as: (a) vacant lots; (b) properties with very low market value relative to the surrounding market; (c) properties in remote areas not served by local real estate professionals; (d) properties with unusual features which may negatively impact a sale; and (e) properties which have been actively marketed (i.e., listed in accordance with their approved marketing plan) for 4 months but have not sold.

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 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, originator, 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).

Net Offer – an amount used to determine the winning bidder on competitive sales and to calculate the marketing fee for sales under certain sales methods. Net Offer is calculated by subtracting the dollar amounts of the financing and loan closing costs (that being paid by HUD) and brokers sales commission from the bid price. For discount sales, the amount of the sales discount is not subtracted from the bid price when calculating the Net Offer. For $1 Home sales, the Net Offer equals $1.

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.

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 identified by the Government as eligible for reimbursement.

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.

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

Support Services Contractor (SSC) – Contractor responsible for the administration and financial support of the HUD REO Portfolio. The SSC is also 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 (see Section 6) 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 Lender (Mortgagee) following foreclosure of an FHA insured mortgage and the filing of a claim for insurance benefits. 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. .

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. Mortgagee compliance tasks are not required for these properties.

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 Home. The HUD GTR must approve all repurchase requests. Mortgagee compliance tasks are not required for these properties.

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. Mortgagee compliance tasks are not required for these properties.

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. These 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, SSC, 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.

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. The Contractor may have to access this information to meet the requirements of the PWS.

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 properties acquired by HUD.

3.1.5 COST ESTIMATING SOFTWARE

Cost Estimating software is a commercial-off-the-shelf (COTS) software which provides one-t0-four unit single family residential property repair and preservation (maintenance) cost estimations.

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 shall be limited to individuals based upon…