P&P GENERAL SESSION. Quality Expectations

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1 P&P GENERAL SESSION Quality Expectations

2 State of the Network On-Time Performance and Quality Results

3 State of the Network On-Time Performance Results Average Days to Complete Initial and Convey Orders

4 State of the Network Quality Results 2014 Number of NPL's SQA Score JANUARY FEBRUARY MARCH APRIL May 3.30 January February March April May

5 State of the Network Quality Results Number of Reconveys January February March April May 88

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7 Vendor reports post sale conditions Safeguard reviews and reports ICC if all conditions met Client conveys to HUD FSM Inspection HUD accepts property

8 Post-Conveyance Inspections An inspection to determine if the property meets the HUD Compliance Standard. Performed by Field Service Managers (FSMs), independent contractors retained by HUD. Typically completed hours after property is conveyed to HUD.

9 Post-Conveyance Inspections FSMs complete detailed inspection report and submit to HUD HUD evaluates in detail this inspection report

10 HUD Inspection Report (HIPR)

11 Other Errors Identified During a HUD Inspection Non-Performance Letter (NPL) Issued when insufficient or improper property preservation work is found at the property No monetary loss or response required, but clients still care

12 Other Errors Identified During a HUD Inspection Demand Letter Issued when HUD is seeking reimbursement of funds for the following reasons o o Insufficient supporting documentation for work completed Mortgagee neglect typically < $2,500 to repair

13 Other Errors Identified During a HUD Inspection Preliminary Notice of Intent to Reconvey (PNOIR) FSM may recommend based on HPIR HUD will also review loan history to make the decision

14 Reconvey Notice Reviews Safeguard s independent Quality Assurance group reviews for potential: FSM errors Client errors Safeguard errors Vendor errors

15 Reconvey Notice Reviews Safeguard will appeal if FSM or client errors are identified

16 Common Errors Causing Reconveys Roof tarps Temporary measures and roof is expected to be repaired prior to conveyance Active roof leaks Water intrusion (non-roof related) Mold not remediated and/or source not fully addressed

17 Common Errors Causing Reconveys Structural damage Includes settling if not reported at initial secure Unfinished renovations

18 Cost of Reconveys Average cost of a reconvey is $30,000 Holding costs This is the cost associated with the amount of time the property is in the banks inventory to the time it is reconveyed back to HUD Repair costs Safeguard may be responsible for some or all of the costs to repair to the property

19 Cost of Reconveys Maintenance costs If Safeguard is responsible, the client cannot be charged for any routine maintenance work (inspections, grass cuts, winterizations). If you are responsible for a reconvey, you can receive chargebacks for any or all of the above.

20 How to Prevent a Reconvey Report all new and worsening conditions and damages Complete a Property Condition Report on initial secures at conveys at minimum. Best practice is to complete on all P&P orders where you are entering the property. A condition is worsening if it is not the exact same scope as reported in the Restated Bids section of Vendor Web. Provide new bid if worsening.

21 How to Prevent a Reconvey Report all new and worsening conditions and damages (cont d) Include missing items and mortgagor neglect Identify the source Know the BIG 6

22 How to Prevent a Reconvey Understand the HUD allowable amounts Ensures only necessary bids submitted and work completed timely Ensure necessary photos are present on each and every order Photo documentation is only means of ensuring the property is ICC Follow work order instructions

23 Reconvey Example Water & Roof Damage Initial secure completed on 8/23/12 No roof damage reported on initial secure, no photos to support interior of property was in convey condition Water, fire and other damages not reported on subsequent inspection updates Reconvey initiated by FHA 5/14/13 due to roof and water damage Due to inadequate photos, Safeguard unable to determine if water damage was present prior to conveyance Cost to Vendor > $20,000

24 Reconvey Example Water & Roof Damage On 9/20/13 contractor replaced sump pump and provided photos of a barn with the roof intact No photos of the barn were submitted on the UTIL or GCL orders Cost to Vendor > $30,000 On 10/17/13 photos support roof collapsing but vendor reported no new damage Property reconveyed due to dilapidated barn

25 Reconvey Example Water & Roof Damage Initial secure completed on 10/9/13 No roof damage reported on initial secure Mold and water damage reported, but no bids to address One photo of attic provided Cost to Vendor > $30,000 Reconvey initiated by FHA 12/19/13 due to active roof leak, water and mold damage Due to inadequate photos, Safeguard unable to determine if roof leak, water and mold damage was present prior to conveyance

26 Developing an Eye for Quality

27 Property Damage Assessment Identify, Address, Report, Bid Identification of damages and the source of damage is essential to protecting a property Addressing damages utilizing allowables while on site helps prevent further damage from occurring

28 Property Damage Assessment Identify, Address, Report, Bid Reporting in detail the conditions that exist at the property gives our clients a full picture of the condition of their property Bids provided with supporting details such as why the repair is necessary, dimensions, materials, and resources needed to complete

29 Property Damage Assessment Identify Property Condition Report Crew training and incentives Review missed opportunities with crews and office Implement a check out process using Photo Direct

30 Property Damage Assessment Results of Poor Identification Vendor provides photos of basement walls cracking but reports as mortgagor neglect True source of damage not identified and no bids to repair provided HUD inspector identifies as structural damage, reconvey in process

31 Property Damage Assessment Address Train crews on proper use of allowables Photo documentation must support actions taken and amount of allowable used Ensure the source of the damage is being addressed not just the symptoms Properly stock trucks with materials and equipment necessary to address while on-site When to call Safeguard?

32 Property Damage Assessment Address Damages Missed Opportunities Proper use of allowables ensures that the critical issues at a property are addressed while on-site Field crews and office staff should be trained to identify all conditions at a property where an allowable can be used Misuse or not using allowables reduces your profitability and places responsibility of unaddressed issues on your company

33 Property Damage Assessment Report Utilize the Property Condition Report Provide all supporting details Source/cause, dimensions, scope of damage, implications if not addressed Report worsening conditions every visit to the property The office staff must act as the final quality control before submitting the order When in doubt, report!

34 Property Damage Assessment Reporting Errors

35 Property Damage Assessment Reporting Errors Vendor submitted this photo and reported seepage not causing further damage on initial secure Subsequent vendor reports inoperable sump pump Initial secure vendor assessed chargeback for water damage repairs and new sump pump

36 Property Damage Assessment Bid Details to include: Full description of bid to include source of damage if applicable Dimensions Materials Resources (people, rental equip., licensed sub, etc.) Why is the bid needed What are the implications if not approved Use a cost estimator to determine fair and consistent pricing Ensure there are no allowables that could be used to complete work Bid to repair the source and the symptoms

37 Property Damage Assessment Good Bid Detail

38 Property Damage Assessment Poor Bid Detail