> May 13, 2002

MORTGAGEE LETTER 2002-10

TO: All Approved Mortgagees

> **ATTENTION: Single Family Servicing Managers**

# SUBJECT: 2002 Preservation and Protection Cost Schedule and Policy Updates/2002 Post Endorsement Guidelines, Fees and Charges

> This Mortgagee Letter is effective June 21, 2002, and provides updates
> and clarifications on policy relating to preservation and protection
> (P&P) and updates to the maximum P&P costs and post-endorsement fees.
> This Mortgagee Letter increases the overall maximum allowable cost for
> preservation and protection. Included in the maximum allowable cost
> per property are a one-time lock change/securing fee and a requirement
> for mortgagees to perform exterior debris removal. Also, there is an
> increase in photograph requirements, an updated format of the cost
> schedules and local variations, and a directory of the Department's
> current property management and marketing (M&M) contractors.
>
> The new format separates the cost schedule from the service
> requirements. Service requirement variations are separated by State,
> which will result in a more efficient method to gather and retrieve
> information necessary to preserve and protect properties.
>
> This Mortgagee Letter supersedes Mortgagee Letter 97-31 and Mortgagee
> Letter 00-26.
>
> A revised lender appeal process and guidance for code violations will
> be addressed in a separate Mortgagee Letter.
>
> If you have any questions, please contact the appropriate M&M
> contractor shown in Section III of this Mortgagee Letter.
>
> Attachments
>
> \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
>
> John C. Weicher
>
> Assistant Secretary for Housing-
>
> Federal Housing Commissioner

#### SECTION I

PRESERVATION AND PROTECTION GUIDELINES AND COST SCHEDULES

**SECTION II**

POST ENDORSEMENT FEES AND CHARGES

**SECTION III**

DIRECTORY OF MANAGEMENT AND MARKETING CONTRACTORS

> **[TABLE OF CONTENTS]{.underline}**

# SECTION I. GENERAL REQUIREMENTS FOR PRESERVATION

#  AND PROTECTION SERVICES

#  Page

> A. Claiming
> Reimbursement................................................\... 1
>
> B. Responsibility for
> Damage................................................. 2
>
> 1\. Damage by Fire, Flood, Earthquake, Tornado
>
> Hurricane, or Boiler Explosion.................................. 2
>
> 2\. Damage Due to Mortgagee Neglect...................................
> 2
>
> C. Existing
> Warranties.......................................................\...
> 3

D.  Inspections...................................................................
    3

> E. Lock
> Change/Securing..................................................... 4
>
> F. Boarding of
> Properties...................................................... 4
>
> G. Debris
> Removal..............................................................
> 5
>
> H. Hazardous Waste
> Removal................................................ 5
>
> I. Ground and Yard
> Maintenance............................................ 5
>
> J. Eviction
> Costs............................................................\....
> 6
>
> K.
> Winterization.................................................................
> 7
>
> L.
> Utilities......\..................................................................
> 7
>
> M. Securing/Winterizing Swimming
> Pools.................................. 7

N.
Photographs..................................................................
7

O. Signs for Emergency
Contact...........................................\... 7

> P. Failure to Perform Preservation and
> Protection......................... 8
>
> Q. Request to Exceed Cost
> Limits............................................ 8
>
> R. Extensions of
> Time........................................................... 9
>
> S. Contacts for Lender
> Appeal................................................ 10
>
> **[ATTACHMENTS]{.underline}**
>
> Attachment 1 Preservation and Protection Overall Maximum
>
> Cost Schedule
>
> Attachment 2 Inspection Service Requirements and Cost
>
> Schedule
>
> Attachment 3 Lock Change/Securing Service Requirements
>
> and Cost Schedule
>
> Attachment 4 Boarding Service Requirements and Cost
>
> Schedule
>
> Attachment 5 Debris Removal Service Requirements and Cost
>
> Schedule
>
> Attachment 6 Yard Maintenance Service Requirements and
>
> Cost Schedule
>
> Attachment 7 Winterization Service Requirements and Cost
>
> Schedule
>
> Attachment 8 Photograph Requirements and Cost Schedule
>
> Attachment 9 Form: \"Request to Exceed Cost Limit(s) For
>
> Preservation and Protection\"

Attachment 10 Contacts for Lender Appeal

**SECTION II**. **POST ENDORSEMENT FEES AND CHARGES**

**SECTION III. DIRECTORY OF RESPONSIBLE GEOGRAPHIC**

**SERVICE AREAS FOR MANAGEMENT AND**

**MARKETING CONTRACTORS**

**[2002 PRESERVATION AND PROTECTION GUIDELINES]{.underline}**

**SECTION I.** **[GENERAL REQUIREMENTS FOR PRESERVATION
AND]{.underline}**

**[PROTECTION SERVICES]{.underline}**

**A. [CLAIMING REIMBURSEMENT]{.underline}**

The Department of Housing and Urban Development expects mortgagees to
exercise the same level of diligence and prudence in protecting and
preserving vacant properties which secure FHA-insured mortgages that the
mortgagees would provide if they could look only to the property for
recovery of losses from foreclosure. Mortgagees must take reasonable
action to protect and preserve properties against potential damage and
prevent progressive deterioration prior to conveying the property to
HUD, unless such actions would constitute illegal trespass.

If a property securing a mortgage insured on or after January 1, 1977,
is damaged because of the mortgagee\'s failure to preserve and protect
the property, which may include failure to timely initiate foreclosure,
HUD will hold the mortgagee accountable. The mortgagee may take
additional protection and preservation measures to those described
herein, but HUD will reimburse the mortgagee only if the mortgagee
obtains prior written approval from the Department's designated
Management and Marketing (M&M) contractor.

Mortgagees may expend up to the maximum amount listed in **Attachment
1** for the preservation and protection of a property. HUD has updated
the overall maximum cost schedule to reflect changes that have occurred
in preservation and protection requirements and costs, including the
one-time securing fee. This fee covers, but is not limited to, initial
lock changes, which include a master lock with identical key codes for
the front and rear entry doors and any other entryway which provides
immediate access to the living area, attached garage or basement area.
Also included in the one-time securing fee are temporary measures to
protect the interior of the property from damage caused by leaking roofs
(e.g., tarping). The costs of boarding, inspection, photographs,
securing swimming pools, and utility bills are not included in the
maximum limit per property. These services will be reimbursed, provided
costs stay within the cost allowables listed in the Attachments. The
mortgagee must support all expenditures with receipts.

For the purpose of claiming reimbursement, HUD considers actions
identified in this Mortgagee Letter to be approved, provided these
actions are performed in accordance with the work requirements and meet
all applicable cost limits. If HUD determines that amounts paid for
reimbursement are inappropriate, unnecessary, unsupported, or excessive;
or that the mortgagee obtained bids that were not independent and
competitive; or that services claimed have not been completely and
properly performed, HUD will require repayment of all such claim
amounts. Mortgagees must not make any claim for reimbursement for
preservation and protection services performed after conveyance to HUD.
To be reimbursable, the expense must have been incurred prior to the
date of conveyance. Payment of certain utility bills are sometimes
considered as an exception to this guideline; please see Item L and
**Attachment 7**.

Generally, the more diligent the mortgagee is in completing the
foreclosure process and conveying the property in a timely manner, the
smaller the amount of expenditures for preservation and protection will
be. A mortgagee may use any individual or firm to perform protection and
preservation services on properties securing FHA-insured mortgages,
however, the mortgagee remains fully responsible to the Department for
the actions of its agents, whose actions HUD will consider the actions
of the mortgagee.

HUD considers expenses which fall within the individual cost limits in
this Mortgagee Letter to be reasonable and approved, as long as the
aggregate does not exceed the maximum limit per property as identified
in **Attachment 1**. Any expenses which exceed the cost allowables or
exceed the overall maximum cost limit per property are not considered
approved by HUD unless the mortgagee has obtained prior written approval
from HUD's M&M contractor. As noted on page 1 of this section, the cost
of boarding, inspection, photographs, securing swimming pools and
utility costs will be reimbursed if they fall within the cost
allowables, notwithstanding the maximum cost limit per property.

**B. [RESPONSIBILITY FOR DAMAGE]{.underline}**

The mortgagee must preserve and protect vacant properties in its
possession to avoid damage prior to conveyance. A prudent mortgagee will
preserve and protect a vacant property to avoid potential damage to the
property and avoid potential surcharges to its claim. HUD will reimburse
the mortgagee for required preservation and protection costs, within the
established cost limits, when the mortgagee adequately documents and
properly completes measures approved as claimable expenditures.

1.  **[DAMAGE BY FIRE, FLOOD, EARTHQUAKE, TORNADO, HURRICANE, OR A
    CONDOMINIUM'S BOILER EXPLOSION]{.underline}** ‑ All properties
    conveyed to HUD must be undamaged by fire, flood, earthquake,
    tornado, hurricane, or boiler explosion (condominium units only).
    The mortgagee must repair the damage or obtain prior written
    permission from HUD to convey the property in damaged condition. If
    HUD (via the M&M contractor) requires the mortgagee to repair the
    property before conveyance, HUD will not reimburse the cost of these
    repairs.

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2.  **[DAMAGE DUE TO MORTGAGEE NEGLECT]{.underline}** ‑ For properties
    securing mortgages insured on or after January 1, 1977, HUD will
    hold mortgagees responsible if their failure to take adequate action
    to preserve and protect the property results in damage. HUD
    considers a mortgagee's failure to inspect, preserve, and protect
    the property, or initiate foreclosure within the required timeframe,
    to be mortgagee neglect. Mortgagees must not convey properties that
    have become damaged due to mortgagee neglect unless prior written
    approval from HUD has been provided to convey the property in
    damaged condition. If HUD (via the M&M contractor) requires the
    mortgagee to repair damage to the property resulting from mortgagee
    neglect before conveyance, HUD will not reimburse the mortgagee for
    the cost of these repairs.

> If the mortgagee receives permission to convey a property in a damaged
> condition resulting from fire, flood, earthquake, tornado, hurricane,
> condominium boiler explosion or mortgagee neglect, HUD will deduct
> from the mortgage insurance benefits the greater of any hazard
> insurance proceeds recovered by the mortgagee or HUD\'s estimate of
> the cost to repair the property. If the claim is adjusted for damages,
> the mortgagee must mark item 24 of Part A, Form HUD‑27011, "yes" and
> complete items 26 and 27.

If the mortgagee denies responsibility for the damage, it must mark item
24 of Part A, Form HUD‑27011, "no". The mortgagee must identify the
damage and explain the reason for denial of responsibility in the
Mortgagee Comments section on the reverse side of Part A. The mortgagee
also must provide the M&M contractor with all documentation, including
copies of all inspections, showing that the mortgagee took appropriate
action to preserve and protect the property from the time of default to
conveyance. This documentation must accompany the copy of Part A, Form
HUD‑27011, which the mortgagee must send to the M&M contractor.

All documentation must include the FHA case number, and must be legible
and securely fastened to the copy of the claim form that is provided to
HUD's M&M contractors. Without adequate documentation to support the
mortgagee\'s position, the M&M contractor will deem such damage (for
properties securing mortgages insured on or after January 1, 1977) to be
the result of the mortgagee\'s failure to take appropriate action to
preserve and protect the property (mortgagee neglect).

**C. [EXISTING WARRANTIES]{.underline}**

The Department will not reimburse mortgagees for repairs to properties
other than those required for preservation and protection. When
repairing a property, mortgagees must always be aware of existing
warranties on properties built within the previous ten years.

## D. INSPECTIONS {#d.-inspections .unnumbered}

When a mortgage is in default and a payment is not received within 45
days of the due date, and efforts to reach the mortgagor by telephone or
other means within that period have proven unsuccessful, the mortgagee
must make a visual inspection of the property to determine occupancy
status in accordance with the requirements in **Attachment 2**. The cost
schedule has been reformatted to show reimbursable limits for initial
inspections, additional units and subsequent inspections. Subsequent
inspections are to be performed 25-35 days following any prior
inspection if the property is vacant or following the last contact with
the mortgagor if the mortgage is in default. No more than twelve
inspections per calendar year are allowed to be claimed unless indicated
otherwise in **Attachment 2** or when a reimbursable eviction inspection
is performed.

**E. [LOCK CHANGE/SECURING]{.underline}**

Properties must be secured to prevent unauthorized entry and to protect
against weather damage in accordance with the requirements in
**Attachment 3.** The Lock Change/Securing Service cost schedule
includes a "one-time securing fee". This will facilitate the securing of
HUD property by not requiring prior approval from the M&M contractor.
The one-time securing fee will include, but is not limited to, lock
changes, which include a master lock with identical key codes for the
front and rear entry doors; securing any other entryway which provides
immediate access to the living area, attached garage or basement area;
and, as needed, temporary measures to protect the interior of the
property from damage caused by leaking roofs. These temporary repairs in
the form of patchwork/covering, or replacing loose shingles should be
performed promptly. Mortgagees must document the temporary measures
taken to protect the property. See **Attachment 3** for cost schedule.
"Before" and "after" photographs are required.

Allowable costs for Boarding of Properties, Ground and Yard Maintenance
and Winterization can be found under separate attachments.

**F. [BOARDING OF PROPERTIES]{.underline}**

Mortgagees shall not board a property unless they have prior written
approval from the M&M contractor; the property is severely damaged by
fire, flood or other natural disaster and must be secured for safety
reasons; or the property is located in one of the pre-approved boarding
areas shown in **Attachment 4**. Where boarding is required, openings on
these properties must be securely boarded using carriage bolts or
screws. The use of nails is prohibited. The cost of boarding properties
is not to be included in the maximum allowable limit per property.
**Attachment 4** details boarding service requirements, cost limits, and
pre-approved boarding areas. "Before" and "after" photographs are
required.

**G.** **[DEBRIS REMOVAL]{.underline}**

[]{.mark}

Mortgagees are to remove all exterior debris. This action will promote
preservation and protection of the property by allowing grass cuts and
other yard maintenance requirements to be performed in a timely manner
while reducing possible code violations.

Mortgagees are not to remove interior debris except for: 1) debris that
constitutes a health or safety hazard, 2) debris that causes the
issuance of a code violation which would result in a fine and/or lien if
not corrected prior to conveyance to HUD, 3) debris required to be
removed as part of an eviction by local law enforcement or crews under
the control and direction of local law enforcement where the mortgagee
has no control over the timing of removal, and 4) geographic areas
identified in **Attachment 5.**

HUD will not reimburse amounts in excess of the amount listed in
**Attachment 5** for debris removal without prior written approval from
the M&M contractor. A mortgagee may expend up to this amount without M&M
contractor approval. Costs such as labor hours, dump fees, and
transportation costs (i.e. fuel, mileage, truck rental, etc.) should not
be claimed in addition to debris removal cost limits, as these costs are
incorporated in the per unit allowable cost for debris removal. "Before"
and "after" photographs are required.

See Item J, Eviction Costs, for guidance concerning items removed from
the property in connection with an eviction.

**H. [HAZARDOUS WASTE REMOVAL]{.underline}**

Most residential properties will have very limited hazardous waste. See
**Attachment 5** for specific requirements regarding the removal of
hazardous waste.

**I. [GROUND AND YARD MAINTENANCE]{.underline}**

[]{.mark}

A mortgagee will not be reimbursed more than once for an initial grass
cut. A final grass cut shall be completed no later than two weeks prior
to conveyance if conveyance is completed during the growing season. See
**Attachment 6** for seasonal times. Yard maintenance must be performed
in accordance with the requirements in **Attachment 6.**

**J. [EVICTION COSTS]{.underline}**

Generally only the costs of removing personal property while the
eviction is being conducted under the control and direction of local law
enforcement officials are considered eviction costs and are not subject
to the allowable cost limit for the jurisdiction. If the mortgagee is
required by local law to remove trash and debris from the property as
part of the eviction, and the mortgagee has no control over the timing
of removal, the costs of removing the items are considered eviction
expenses/costs. Such costs are to be claimed as labor hours and are to
be reasonable and customary for services performed in the area.

Only reasonable costs for eviction crews necessary to accomplish the
eviction will be reimbursed. For example, waiting for the sheriff to
perform the eviction will be disallowed. If the sheriff, statute, or
local law requires that a specific service be performed, such
requirement must be documented.

In most circumstances no more than three or four men should be necessary
to complete an eviction for a townhouse or condo and no more than six
men should be required for a single family detached dwelling. If the
local law provides that a specific number of men be provided, or if the
law enforcement official conducting the eviction identifies a need for
additional men to be present at the time of the eviction, there must be
documentation to support the need for these additional men in the claim
review file.

To reduce the number of canceled and rescheduled evictions, mortgagees
are required to perform an inspection within seventy-two hours of a
scheduled eviction to determine whether or not the property is vacant.
Except where a local variation requires an inspection every week, this
eviction inspection will be reimbursed as a subsequent inspection. Where
an inspection is to be conducted the same week as the scheduled
eviction, the inspection is to be performed within seventy-two hours of
the scheduled eviction. Mortgagees must confirm with the sheriff or the
appropriate local law enforcement official the day before or morning of
the scheduled eviction to confirm that the eviction is going to occur as
scheduled.

This should result in reduced costs that otherwise would be incurred by
mortgagees for crews that show up for canceled or rescheduled evictions.
If this happens, the mortgagee is only eligible to claim a maximum of
one hour of labor per man.

Sound judgment is to be used in distinguishing personal property from
debris. Generally, examples of items that might be considered personal
property are chairs, tables, clothing and books.

Examples of debris are trash, shabby and torn carpet, cracked and torn
linoleum, waste paper, sweepings and litter. However, mortgagees must
follow any local code and laws regarding the definition of personal
property versus debris. If mortgagees have questions regarding personal
property and debris, please consult local counsel for guidance.

Photographs are required to support all personal property/debris removed
from the property as part of an eviction. A maximum of ten photographs
will be reimbursed as part of the eviction costs. Mortgagees should use
discretion in determining if additional photos are needed to adequately
support all services/items to be claimed. The maximum allowable amount
per photo is listed in **Attachment 8.** Eviction costs should be
entered in item 305 of Part D of the claim form.

**K. [WINTERIZATION]{.underline}**

In jurisdictions where winterization is required, **ALL** properties
must be winterized between October 1 and March 31. Properties should not
be winterized between April 1 and September 30. Exceptions to these
winterization time periods and detailed service requirements are
specified in **Attachment 7.**

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

In jurisdictions where utilities are to remain on, the mortgagee may pay
the bill and claim reimbursement for utility costs that cover the date
of the conveyance until the end of that utility\'s billing cycle. See
**Attachment 7** for specific requirements regarding utilities.

**M. [SECURING/ WINTERIZING SWIMMING POOLS]{.underline}**

Fees for securing or winterizing swimming pools are not included in the
maximum allowable limit per property. Prior written approval from the
M&M contractor is required for securing or winterizing pools unless
otherwise noted in these guidelines. See **Attachment 3** for specific
requirements regarding swimming pools. Before and after photographs are
required.

**N. [PHOTOGRAPHS]{.underline}**

[]{.mark}

To promote the use of e-commerce, digital photographs will be accepted,
but are not required. The cost of photographs will be allowed only to
support the initial vacancy inspection, "before" and "after" photographs
for the "one-time securing" service, securing/winterizing swimming
pools, boarding, yard maintenance and debris removal; and expenses
beyond allowable cost limits where prior approval is required.
Photographs will also be required to support personal property/debris
removed as part of an eviction (unless otherwise specified in the
variations from the general requirements in **Attachment 8**).

**O. [SIGNS FOR EMERGENCY CONTACT]{.underline}**

Mortgagees must post small signs no larger than 8.5" x 11" to an
interior window or front door. The sign shall not state that the
property is pending foreclosure or give the phone numbers or name of the
M&M contractor as a contact. The sign should contain the mortgagee's
toll free telephone number, if the mortgagee has one, and the telephone
number of the mortgagee\'s local representative, i.e. the company to
contact in the event of

emergency. There is no allowable cost to post signs or stickers unless
noted in the local office variations. See **Attachments 3 and 7** for
variations.

**P. [FAILURE TO PERFORM PRESERVATION AND PROTECTION]{.underline}**

When a mortgagee's failure to properly preserve and protect a property
results in damage to the property (e.g., a roof leak resulting in
interior damage,) the M&M contractor must notify the mortgagee of the
failure to perform within 30 days of conveyance. HUD, at its discretion,
will either re-convey the property to the mortgagee or require the
mortgagee to reimburse HUD the greater of the estimated cost of repair
or any insurance recovery received by the mortgagee. (24CFR 203.379(c)).

**Q. [REQUEST TO EXCEED COST LIMITS]{.underline}**

If the cost to perform required preservation and protection exceeds any
individual cost limits or the overall cap shown in the most recent
Preservation and Protection/Post Endorsement Guidelines and Fee
Schedules, the mortgagee must request permission to exceed the maximum
allowable expenses in writing. The sample format for submission of this
request is included as **Attachment 9, *Request to Exceed Cost Limit(s)
for Preservation and Protection***. The mortgagee must include with the
request any documentation needed to substantiate the over-allowable
expense.

In emergency situations, mortgagees may fax their requests to the M&M
contractor's office, and confirm receipt of these requests verbally. The
M&M contractor's office will respond to these emergency requests via fax
if the mortgagee so requests. Mortgagees are responsible for confirming
receipt and legibility of all requests sent via fax.

The M&M contractor has the responsibility to review and approve or
disapprove over allowable requests from mortgagees. The M&M contractor
shall evaluate all requests to increase line items on a case-by-case
basis to determine if the increase is reasonable and justifiable. With
the exception of requests involving debris removal where two independent
bids are mandatory, there is no requirement for the mortgagee to submit
multiple bids for other expense types.

However, if the M&M contractor believes that the expense is not
justified, the contractor may either request that the mortgagee obtain
additional independent bids or deny the over-allowable expense request,
in writing, and provide a full explanation to the mortgagee including
evidence of similar bids or past expenses for the same services that
support the denial. The M&M contractor may provide referrals to
contractors who have performed similar services at a reasonable price
but may not require use of any particular contractor as a requirement
for approval.

The M&M contractor must respond to the mortgagees request, in writing,
within **10 calendar days** from the date of receipt. Mortgagees who
have not received a response to an

over-allowable expense request within **10 calendar days** should
contact the appropriate GTR.

If the mortgagee disagrees with the M&M contractor's decision to deny
the request, the mortgagee will have 10 calendar days to submit an
appeal to the M&M contractor. The M&M contractor must forward the appeal
request, including all supporting documentation that the mortgagee
provided supporting the appeal to its GTR within **24 hours** of
receipt. The GTR must respond to the mortgagee's appeal request within
**5 calendar days** of receipt from the M&M contractor. Mortgagees who
have not received a response to their appeal within **5 calendar days**
should contact the REO Director. There is no appeal of over-allowable
expense requests beyond the REO Director.

If a mortgagee elects, as a matter of convenience, to obtain services at
a cost higher than the allowable limits, it may do so, but it may not
claim amounts in excess of the limits for reimbursement.

**R. [EXTENSIONS OF TIME]{.underline}**

Requests to exceed cost limits are not the same as requests to exceed
timeframes.

A mortgagee\'s failure to receive a response from an M&M contractor to
exceed cost limits does not constitute an extension of time to convey
title and submit Part A, or an extension of time to provide title
evidence and submit Part B. The mortgagee must submit a separate request
for each extension of time. All requests for extensions must be
submitted on Form HUD‑50012, Mortgagee\'s Request for Extensions of
Time. Verbal requests for extensions will not be accepted.

Mortgagees must submit written requests promptly to the M&M contractor
responsible for disposition of the property. Upon receipt, the M&M
contractor will have **10 calendar days** to approve the request, reject
the request as lacking adequate documentation or deny the request. If
the M&M contractor rejects or denies the request for an extension of
time, the contractor will specify in writing the reason for the
rejection or denial.

If the mortgagee has not received a response within **10 calendar days**
of receipt by the M&M contractor, the mortgagee may resubmit a copy of
the request directly to the GTR. See **Attachment 10**, Contacts for
Lender Appeal. The GTR will have **5 calendar days** from receipt,
either to approve the request, reject the request as lacking adequate
documentation or deny the request. If the GTR rejects or denies the
request for an extension of time, the GTR will specify in writing the
reason for the rejection or denial.

If the GTR fails to respond to the request for an extension of time
within **5 calendar days**, the mortgagee may contact the REO Director
at the HOC with jurisdiction over the property and request a time
extension. See **Attachment 10** for listing of REO Directors. The REO
Director will make a determination to approve or deny. In instances
where HUD's failure to respond caused the mortgagee to exceed time
limits, the REO Director will authorize a 30 day extension of time to
allow for resolution of the issue.

In emergency situations, mortgagees may fax their requests to the M&M
contractor's office, and confirm receipt of these requests verbally. The
local M&M contractors office will respond to these emergency requests
via fax if the mortgagee so requests. Mortgagees are responsible for
confirming receipt and legibility of all requests sent via fax.

**S. [CONTACTS FOR LENDER APPEAL]{.underline}**

[]{.mark}

A new appeal process for lender disputes arising from property
condition, re-conveyance, demolition requests and administrative offset
issues will be addressed in a separate Mortgagee Letter. In the interim,
lenders are to contact the appropriate GTR for guidance. **See
Attachment 10**.

If you have other questions regarding this Mortgagee Letter, please
contact the M&M contractor in your area. See Section III for directory.