+---------+------------------------------------------------------------+
| !       | **DEPARTMENT OF VETERANS AFFAIRS**                         |
| [](medi |                                                            |
| a/image | **REGIONAL LOAN CENTER**                                   |
| 1.emf){ |                                                            |
| width=" | **NORRIS COTTON FEDERAL BUILDING**                         |
| 0.86458 |                                                            |
| 3333333 | **275 CHESTNUT STREET**                                    |
| 3334in" |                                                            |
| heig    | **MANCHESTER NH 03101**                                    |
| ht="0.8 |                                                            |
| 375in"} |                                                            |
+---------+------------------------------------------------------------+

In Reply Refer to: 373/263

**[Regional Loan Center Release No. 06-06]{.underline}**

TO: ALL SERVICERS AND HOLDERS

SUBJ: EXPENSES FOR PRESERVATION OF SECURITY & LIQUIDATION

**WHAT IS THE PURPOSE OF THIS RELEASE?**

The purpose of this release is to describe the minimum requirements for
securing vacant properties and the maximum expenses allowed for
properties located in **Connecticut, Maine, Massachusetts, New
Hampshire, New York, Rhode Island and Vermont.** It is not our intent to
regulate the amounts that holders pay to protect and preserve properties
or to decide what measures a holder must take to preserve a property.

**WHAT IS THE EFFECTIVE DATE?**

> This policy is effective for all VA loan foreclosures on or after
> September 1, 2006.

**IS PRIOR APPROVAL REQUIRED?**

[Prior approval is not required and will not be given]{.underline}. If
an item is not covered by this

release or there are unusual circumstances that support additional
expense, you may

submit complete information to justify the additional expense with the
Claim Under

Loan Guaranty and request reimbursement at that time. The holder is
responsible for

measures needed to protect and preserve the security of the loan. The
decision as to

what action to take to preserve and protect the property is the holder's
decision, and it

is independent of the amount of the costs that VA will reimburse.

**WHAT ARE THE RESPONSIBLITIES OF THE HOLDER?**

> The holder is responsible to protect and preserve properties when they
> become vacant and abandoned. [Holders are to ensure compliance with
> all city, county, or other ordinances in accordance with the terms of
> the mortgage loan agreement.]{.underline}
>
> A holder may advance any reasonable amount necessary and proper for
> the maintenance or repair of the security and such advance may be
> added to the guaranteed indebtedness. Most security instruments have a
> provision to protect the property securing the loan. The removal of
> hazardous materials, the correction of hazardous conditions, and the
> avoidance of liens are primary concerns.

**WHAT IF THE PROPERTY IS NOT PROTECTED AND PRESERVED?**

> If a property is damaged due to a holder's failure to take proper and
> reasonable action to protect and preserve, the claim will be reduced
> accordingly. Failure to protect and preserve that results in a
> decreased value may also cause VA not to specify an amount for credit
> to the indebtedness in the event of foreclosure (no bid). A holder may
> utilize the protection and preservation services of any individual or
> company, but the holder will remain fully responsible for the actions
> of any such agent.

**WHAT IF THE PROPERTY IS ABANDONED?**

> If a loan is more than 30 days delinquent and the property is
> abandoned, the holder must take appropriate action to protect the
> property from vandalism and the elements. Within 15 days after
> confirming abandonment, the holder must report the abandonment to the
> VA and immediately initiate appropriate action to terminate the loan.

**WHAT EXPENSES WILL BE REIMBURSED?**

> At the time of claim payment holders will be reimbursed for property
> inspections and preservation costs incurred before the interest cutoff
> date or foreclosure sale date, whichever occurs first. Evidence of
> payment must be submitted with the claim. A description of each
> service and the date the service was performed should also be
> provided. Maximum allowable amounts can be found on Attachment B.
> (Attachment A provides additional guidelines on specific property
> preservation issues.) If expenses were incurred above these amounts
> through no fault of the holder or if a holder paid an expense not
> referred to on Attachment B, a well documented request should be
> submitted with the claim in order for payment to be considered.

**WHOM SHOULD YOU CONTACT FOR MORE INFORMATION?**

If you have any questions regarding this release, please contact Terry
Cere, Loan

Administration Officer, at 603-222-5803 or by e-mail at
therese.cere@vba.va.gov.

William Dallmann

Loan Guaranty Officer Attachments: Exhibits A and B

**EXHIBIT A -**

**Property Preservation Guidelines**

**1. [PROPERTY INSPECTIONS]{.underline}**

Inspections should be conducted whenever the holder becomes aware that
the physical condition of the security may be in jeopardy. Unless a
repayment agreement is in effect, a property inspection shall also be
made:

a.  Before the 60th day of delinquency or before initiating action to
    liquidate a loan, whichever is earlier; and

b.  At least once each month after liquidation proceedings have been
    started, unless servicing information shows the property remains
    owner occupied.

c.  In the case of an abandoned property, inspections should be made at
    least monthly to prevent deterioration due to vandalism or neglect.

d.  VA should be notified immediately if any substantive damage to the
    property is found.

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2.  **[LOCKSET INSTALLATION]{.underline}**

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a.  An acceptable lock shall be installed in the door nearest the
    street. Existing lock and lock hardware on the door shall be removed
    and the door frame repaired prior to installation. All other
    exterior doors shall be secured and existing locks used when in good
    working order.

b.  All windows shall be closed and locked.

c.  On all vacant properties, the holder must arrange access so that the
    appraiser can conduct the liquidation appraisal. [Failure to do so
    could result in VA being unable to issue bidding instructions for a
    pending sale]{.underline}.

**3. [WINTERIZATION]{.underline}** (authorized between October 1^st^
through April 30^th^)

a.  [Required services for **all properties**]{.underline}:

b.  The water shall be shut off at the meter valve; the meter
    disconnected (not cut) and drained.

c.  Drain all water lines by opening all valves and faucets.

d.  Drain the hot water tank and open the safety relief valve from same.

e.  All commodes shall be flushed to drain all water from tank and bowl.
    Remaining water must be siphoned out.

f.  All drain traps must be siphoned of excess water.

g.  All water lines shall be blown clear of all water using a minimum 50
    lb. of air pressure.

h.  Permanent, non-staining anti-freeze suitable for plastic piping
    shall be poured into each commode bowl and all drain traps.

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b.  [Required services for properties with **hot water or steam heating
    systems**]{.underline}:

c.  Open all drain cocks on boiler.

d.  Open all valves and air bleeders on expansion tanks and radiators.

e.  All return lines shall be disconnected at the lowest point of the
    system and at boiler return entry, allowing all lines to drain.

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c.  [Required services for properties with **hot water radiant heating
    systems, water lines in concrete floor**]{.underline}:

d.  Drain boiler completely.

e.  Disconnect distribution lines at boiler and blow all lines free of
    water using minimum of 50 lb. of air pressure.

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d.  [Required services for properties with **hot water baseboard heating
    systems**]{.underline}:

e.  Drain boiler completely.

f.  Open all air bleeder valves.

g.  Disconnect distribution lines and blow all lines free of water using
    minimum of 50 lb. of air pressure.

h.  If heating system is multi-zoned, each zone or loop must have lines
    blown.

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e.  A tag noting the date of winterization will be attached to the hot
    water tank, meter shut-off valve, all commodes and kitchen faucets.

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f.  **Failure to properly winterize a property could result in
    substantial damage to the property, thereby increasing the risk of a
    No Bid/No Election case or claim adjustment**.

**4. [LAWN CARE]{.underline}** (authorized April 1^st^ through September
30^th^)

a.  Initial Service:

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1)  Overgrown shrubs or tree branches that are hazardous or obstruct
    doorways, public walks and driveways shall be trimmed or removed.
    All observed trash and debris in the yard shall be removed as a part
    of the initial service.

2)  Lawns shall be cut to a height of two inches. The lawn shall be
    properly raked and the cuttings removed whenever the height of the
    grass exceeds six inches.

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b.  Scheduled cuttings other than the initial service:

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1)  Scheduled lawn care shall begin on April 1st and end on September
    30th. Cutting every fourteen (14) days is considered reasonable.

2)  The entire lawn shall be cut to a height of two inches, unless area
    exceeds square feet (see Exhibit B for instructions). Grass and
    weeds shall be trimmed around the foundation of all structures,
    planting beds and fences.

**5. [CLEAN-UPS AND DEBRIS REMOVAL]{.underline}**

Generally, cleanup of the property or removal of debris will be the
responsibility of VA once the property is conveyed following a
foreclosure sale. A holder should only proceed to remove items or
materials that are considered to be health or safety hazards. Personal
items such as furniture and appliances should not be removed.
Reimbursement for debris removal is at the rate of \$35 per load, with a
load defined as a ½ ton pickup truck. Additional cleanup will be done
only if there are existing violations against the property. For
reimbursement, such cleanup must be substantiated by a copy of the
violations notice.

**6. [SUMP PUMPS]{.underline}**

a.  Replacement must be substantiated by photos and will be verified by
    reviewing the liquidation appraisal.

b.  The holder is authorized to maintain the electricity on those
    properties where there is a sump pump. Reimbursement for this
    payment will be made on the Claim Under Guaranty when a paid receipt
    is provided.

**7. [SCREENING AND BOARDING]{.underline}**

a.  Screening and/or boarding should be done only in those areas where
    previous experience has shown vandalism and/or theft to be a regular
    problem or where special conditions exist that make it necessary.

b.  If VA screening/boarding guidelines are in conflict with local codes
    or ordinances, the local code or ordinance guidelines will be
    controlling.

c.  Windows with broken glass will be covered with 4 mil. plastic
    sheeting.

d.  Fees for services are expressed in terms of united inches, that is,
    the sum of the height and width of the window. A 30 inch by five
    foot window would be equivalent to 90 united inches.

e.  Screening - all windows on the first floor and basement level shall
    be covered with 4 mil. plastic sheeting and ¼" square wire mesh
    affixed to the frame with 5/8" staples.

f.  Boarding - Nail boarding is not acceptable. Boarding shall include
    doors, windows and other areas of the structure open to vandals or
    to the elements. Openings shall be secured by exterior graded
    plywood no less than ½" thick, or other material of equal strength,
    cut to fix into the openings. Openings in excess of 48" wide must be
    framed with 2" x 4" lumber 24" on center. The plywood or equivalent
    material shall be fastened into the openings by screws or lag
    screws. On metal casement windows, the openings will be bolt
    boarded.

**8. [ROOF REPAIR]{.underline}**

Damaged areas of roof should be covered with tarp. Repairs should be
made only when cost to repair will not exceed cost to tarp.

**9. [SWIMMING POOLS]{.underline}**

a.  Inground pools are to be adequately covered and secured to prevent
    entry into the pool. Entry gates are to be locked and damaged
    security fences are to be repaired to prevent access to the pool
    area. Pools are to have sufficient water to ensure that proper
    pressure is maintained to prevent cracking and failure to the bottom
    or side walls. Inground pools should not be drained.

b.  If in poor condition, above ground pools should be drained and
    removed. Otherwise, pools are to have sufficient water to prevent
    damage and should be properly covered to prevent entry. Holders are
    to ensure compliance with all ordinances pertaining to swimming
    pools.

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10. **[UTILITIES]{.underline}**

Utilities should be turned off unless required to protect the property.
This typically involves the maintenance of electrical service for homes
to maintain operation of a sump pump. All utility charges should be well
documented and justified on your claim for reimbursement to be
considered. Delinquent utility charges incurred by the owner will not be
reimbursed unless they are lienable charges.

\*This release rescinds all previous Loan Guaranty information letters
or releases issued on this subject by the Manchester Regional Loan
Center.

\*\*For the purpose of this release, the term "holder" refers to both
the actual loan holder and any designated servicer/servicing agent.