4310.5 REV-2

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CHAPTER 15. COLLECTIONS AND DEPOSITS

SECTION I - POLICY

15-1 Collections related to the Single Family Property Disposition

program are received by Field Offices, closing agents, selling

brokers, and property managers, i.e., Real Estate Asset Managers

(REAMs) and Exclusive Listing Brokers (ELBs). All collections are

deposited in a financial institution, to HUD\'s account, by the

organization or company initially receiving the funds. The deposits

are made to either HUD\'s lockbox in a Federally-insured financial

institution or to HUD\'s account at the U. S. Department of the

Treasury by wire transfer. This chapter discusses collections

deposited to HUD\'s lockbox. Refer to Chapter 11, Sales Closing, for

wire transfer policy and procedures. The exhibit included in this

chapter summarizes the types of collections that are received for

single family acquired properties.

SECTION II - INTERNAL CONTROL OBJECTIVES

15-2 Accountability for cash and cash items received is established in

Field Office collection functions, before these amounts can be

misdirected. Appropriate segregation of duties is maintained

between SFPD collection and disbursement functions within the Field

Office.

15-3 All remittances are forwarded to HUD\'s lockbox within 24 hours of

receipt. Remittances received late on Friday are safeguarded in

accordance with instructions in Handbook 1911.1, Handling and

Protecting Cash and other Negotiable Instruments, and forwarded to

the lockbox on the following Monday.

15-4 Documentation supporting collection transactions contains necessary

signatures and the signatures are original and not facsimile.

15-5 Collections are promptly deposited upon receipt and appropriate

documentation is retained. Deposits of collections are confirmed in

SAMS on a daily basis.

15-6 Segregation of Duties. Individuals assigned as single family

acquired property Alternate Assistant Collection Officers (AACOs)

are not responsible for confirming deposits in the Single Family

Accounting Management System (SAMS).

15-7 Security for Collection Handling. Each Field Office provides

adequate security for all HUD collection handling locations, as

described in Handbook 1911.1, Handling and Protecting Cash and other

Negotiable Instruments.

15-8 SAMS Documentation. Copies of all documentation for information

entered into SAMS are retained in the case file and reviewed for

accuracy, timeliness, and completeness.

SECTION III - PROCEDURES FOR PROCESSING COLLECTIONS

15-9 Recording the Collection.

A. Designated Individual(s). The receiving and handling of single

family acquired property disposition collections in the Field

Office shall be restricted to the Alternate Assistant

Collection Officer (AACO). Each Field Office shall designate,

in writing, at least two (one primary and one substitute) AACOs

to receive, process, and deposit single family acquired

property funds. The substitute AACO shall be assigned

collection duties in the absence of the primary AACO. Handbook

1911.1, Handling and Protecting Cash and Other Negotiable

Instruments, discusses AACO functions.

Some Field Offices use alternate cash handling procedures in

which an employee not officially designated as an AACO records

the collection and deposits the remittance in the

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15-1 5/94

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4310.5 REV-2

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lockbox or safeguards checks which cannot be deposited

immediately. This alternate procedure is acceptable, provided

the alternate cash handling practice conforms to the principles

of Handbook 1911.1.

B. Recording Receipt of the Collection. The AACO shall record all

collections on a Collection Register, Form HUD-235, immediately

upon receipt of the collection. This procedure assures that

one document, the Form HUD-235, will provide the initial point

of an audit trail regarding all collections. Form HUD-235 is

illustrated in Appendix 67 and shall be completed as follows:

1\. Date of Remittance. Enter the date that the remittance is

received by the AACO.

2\. Name of Remitter. Enter the name of the remitter who

forwarded the funds to the Field Office.

3\. Type. Use the codes for the type of remittance, as shown

at the bottom of Form HUD-235.

4\. Amount. Enter the dollar amount of the remittance.

5\. Received at Mail Opening Point:

a\. Date. Enter the date that the remittance was received

at the mail opening point.

b\. Name. Enter the name of the person opening the mail

which contained the remittance.

6\. Fund Symbol or Disposition. Enter the FHA case number.

7\. C.D. No. Enter the transmittal number and the date shown

on the related Form SAMS-1100, Cash Transmittal, used for

depositing the funds.

8\. Remark. Use this part of the form to record explanatory

remarks, e.g., returned to remitter for correction of

payee.

15-10 Form of Remittance.

A. Acceptable methods for making payment include money order,

certified check, and cashier\'s check.

B. If cash is offered (except for earnest money deposits as

discussed in paragraph 15-24), it may be accepted. The AACO

shall immediately convert the cash to money order, cashier\'s

check, or certified check, payable to HUD, before additional

processing. The money order, cashier\'s check or certified

check shall be deposited within 24 hours of receipt of the

original cash payment. Purchase a separate money order for

each payer to ensure an audit trail. See paragraph 15-11 for

additional information.

15-11 Cash Receipts.

A. Receipt for Each Remittance. When cash is received, the

remitter shall be provided a receipt prepared on Form

HUD-235.1, Receipt for Remittance Delivery (Appendix 68). In

addition to other information required by the form, it shall

show the case number and the time of day that the collection

took place. Field Offices are responsible for printing Form

HUD-235.1 in an original and two copies. All printed Forms

HUD-235.1 shall be prenumbered and the AACO is responsible for

accounting for each number used. Voided Forms HUD-235.1 shall

be retained and shall be clearly marked \"Void.\"

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4310.5 REV-2

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B. Obtaining a Stock of Form HUD-235.1. It is the Field Office\'s

responsibility to obtain a sufficient stock of the Form

HUD-235.1 for Field Office use. Property managers and closing

agents are responsible for providing their own cash receipt

forms.

C. Distribution. The original copy of Form HUD-235.1 will be

given to the remitter, one copy shall be retained with a copy

of the Form SAMS-1100 in the case file pertaining to the

property for which the deposit is made, and the other copy

shall be retained by the AACO.

D. Cash Collected Away from the Field Office. When cash is

collected while away from the Field Office, the employee shall

immediately convert the cash to money order, cashier\'s check,

or certified check made payable to HUD. Purchase a separate

money order for each payer to ensure an audit trail. The money

order, cashier\'s check or certified check shall be delivered to

the AACO within 24 hours of receipt of the original cash

payment. The remittance advice should indicate all information

required on the Form SAMS-1100 and indicate that cash was

received. The AACO shall prepare a Form SAMS-1100 and forward

the funds, with the original Form SAMS-1100, to HUD\'s contract

bank for lockbox deposits. A Form HUD-235.1, Receipt for

Remittance Delivery, (Appendix 68) should be prepared and

forwarded to the remitter.

15-12 Collection Deposits.

A. Form SAMS-1100. Form SAMS-1100, Cash Transmittal, shall be

used for making deposits. Funds to be deposited are those

recorded on the Collection Register, Form HUD-235 (Appendix

67). The Form SAMS-1100 requires that a separate deposit be

made for each remittance received. Therefore, the Field Office

should record collections on the Collection Register as they

will appear on the related Form SAMS-1100. This procedure will

facilitate making the deposit and will assist in locating the

related Forms SAMS-1100 if an adjustment is necessary.

B. Instructions for Form SAMS-1100. Instructions for preparing

the Form SAMS-1100 are contained in the SAMS User\'s Handbook

and on the back of the form. It is important to complete the

Form SAMS-1100 accurately and completely. Of particular

importance is the accuracy of the post code designation which

describes the type of collection and is used for financial and

reporting purposes. Erroneous information may result in an

unreconciled sale or may affect the profit or loss calculation

on the sale of an individual property. See the exhibit

included in this chapter for the types of collection post

codes. If a post code describing the reason for the collection

is not listed, contact the Chief Property Officer.

C. Daily Deposits. Unless the funds are returned to the remitter,

collections recorded on the Collection Register, Form HUD-235

(Appendix 67), are to be mailed for deposit in HUD\' single

family acquired property lockbox on the same day received or

not later than the next business day.

D. Three-Part Form SAMS-1100. All single family acquired property

collections by Field Offices shall be recorded on a three-part

Form SAMS-1100. It is the Field Office\'s responsibility to

obtain a sufficient stock of these forms.

E. Mailing Address. The Form SAMS-1100, with the collection to be

deposited, shall be mailed to the address below. In no

circumstance shall cash be included with a deposit

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15-3 5/94

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4310.5 REV-2

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transmittal. The mailing address of HUD\'s lockbox for single

family acquired properties is:

U. S. Department of Housing & Urban Development

Single Family Property Disposition

Post Office Box 952484

St. Louis, MO 63195-2484

F. Distribution of the Form SAMS-1100. The original and two

copies of the Form SAMS-1100 shall be distributed as follows:

Originator Original Copy 1 Copy 2

\_\_\_\_\_\_\_\_\_\_ \_\_\_\_\_\_\_\_ \_\_\_\_\_\_ \_\_\_\_\_\_

AACO Sent with Filed with the \*Forwarded

deposit Collection to CPO

Register,

Form HUD-235

Closing Agent/ Sent with Filed in closing \*Sent to CPO

Selling Broker deposit agent\'s/selling attached to

broker\'s records remittance

advice

regarding

forfeited

earnest money

or extension

fee

Property Sent with Filed in property \*Sent to CPO

Manager deposit manager\'s records. attached to

transmittal

letter that

notifies of

collection

\*Before filing with case binder, Form SAMS-1100 should be kept in a

separate file of unconfirmed deposits until confirmed in SAMS. See

deposit confirmation procedures in paragraphs 15-12 through 15-19.

15-13 Confirmation of Lockbox Deposits in SAMS.

A. Deposits to be Confirmed. Field Offices are responsible for

confirming that all deposits of single family acquired property

funds are properly recorded in SAMS. Deposits to be

confirmed are wire transfers and those made by using Form

SAMS-1100. Wire transfers made by closing agents are to be

confirmed following the HUD-1 reconciliation process and are

discussed in Chapter 11 of this handbook. Deposits using

Form SAMS-1100 are to be confirmed in accordance with

procedures in this chapter.

B. Designated individual(s). The Chief Property Officer (CPO)

shall designate, in writing, one or more individual(s) to

confirm that deposits made by using Forms SAMS-1100 have

been properly recorded in SAMS. The individual(s) designated

shall complete all confirmation and documentation action, as

outlined below, and shall not be an individual who is the CPO

or is designated as an AACO. Documentation and approval

requirements are contained in paragraph 15-20 of this chapter.

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4310.5 REV-2

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C. Two-Step Process for Confirming Deposits. To confirm deposits

in SAMS, a two-step process shall be followed:

1\. Determine if deposits, as evidenced by Field Office copies

of Form SAMS-1100, are accurately recorded in SAMS.

2\. Determine if SAMS shows deposits which are not reflected

in Field Office copies of Form SAMS-1100.

D. Preparation for Deposit Confirmation. The following documents

are required to confirm deposits in SAMS:

1\. Applicable Forms SAMS-1100 which have not been confirmed

as being recorded in SAMS, including those Forms SAMS-1100

from property managers and closing agents.

2\. Daily copy of the SAMS Lockbox Posting Report (CL RP LP).

See SAMS User Handbook for instructions on retrieving this

report.

E. Frequency of Deposit Confirmation. Confirmation of deposits

should be done daily regardless of the frequency of lockbox

submissions. It is only through this procedure that

collections incorrectly credited to a Field Office can be

detected.

15-14 Comparison of Form SAMS-1100 with SAMS CL RP LP. Compare deposits

on the Lockbox Posting Report (CL RP LP) with deposits as recorded

on the applicable copy of Form SAMS-1100 (see paragraph 15-12.F.).

Keep in mind that lockbox deposits are posted to SAMS within 7 work

days of the date the Form SAMS-1100 was mailed. If the case number,

post code(s), and the amount of the lockbox deposit agree, write the

words \"Posted in SAMS on (date)\" in the upper right portion of the

Form SAMS-1100. Immediately below these words shall be the date of

the confirmation and the initials of the person making the

confirmation.

15-15 If Case Numbers or Post Codes do not Agree. If funds

reclassification action is required due to differences in the case

number or post codes, follow procedures outlined in paragraph 15-19.

15-16 If Deposit Amounts do not Agree. If the SAMS reports show a
deposit

amount that does not agree with the amount on the related Form

SAMS-1100, contact the Chief, Real Property Branch, Office of

Mortgage Insurance Accounting and Servicing, and provide the details

of the deposit being researched. The Real Property Branch will

advise the Field Office of any additional processing that is

required.

15-17 If the Deposit is not Found in SAMS. If a deposit made on a Form

SAMS-1100 is not found on the Lockbox Posting Report, CL RP LP,

(including the \"Lost and Found\" entity) within 14 work days of

mailing, the CPO shall request of the remitter, supporting

documentation of the payment, e.g., front and back of a cancelled

check. If this documentation does not provide information to locate

the deposit, the supporting documentation and a copy of the Form

SAMS-1100 shall be sent to the Chief, Real Property Branch. If the

deposit cannot be located by the Real Property Branch, the CPO shall

contact the remitter and request that another remittance be

forwarded to HUD. After the remittance is received, it shall be

deposited in accordance with paragraph 15-12 of this Chapter. If

desired, the property manager may be requested to contact the

remitter if the related Form SAMS-1100 pertains to a property

manager collection.

15-18 If the Deposit is not in Field Office Records. After completing
the

deposit confirmation process in paragraphs 15-12 through 15-17, any

remaining deposits on the SAMS CL RP LP report must be researched.

The individual designated to confirm the deposits shall follow up

with the AACO, property manager, selling broker or closing agent to

determine the origination of the collection and to request a copy of

the Form(s) SAMS-1100. If the origin of the collections

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15-5 5/94

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4310.5 REV-2

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cannot be determined, notify the Chief, Real Property Branch, of the

discrepancy. The Real Property Branch will assist in researching

the deposit transactions and in determining required corrective

action.

15-19 Funds Reclassification. If a discrepancy in a post code or case

number is found, determine the correct post code or case number

pertaining to the transaction and prepare a Form SAMS-1120, Funds

Reclassification, to reclassify the transaction. Forward the Form

SAMS-1120 to the Real Property Branch. The Real Property Branch has

48 hours from receipt of the form to complete the reclassification

action. The CPO shall notify the Chief, Real Property Branch, of

any delays in reclassification processing.

15-20 Documentation Supporting Deposits Confirmation. The individual(s)

designated in accordance with paragraphs 15-13 B. shall document

confirmation action taken on each deposit. Each step applied while

attempting to confirm a deposit shall be fully documented to show

\(i\) the procedures applied, (ii) results obtained, (iii) any

adjustments needed to correct data in SAMS and (iv) approvals

obtained regarding the adjustments. The documentation should be

prepared so that another individual can identify the confirmation

procedures applied, amounts, and other data confirmed, and the final

results of the confirmation. Also to be retained are all SAMS

reports or other Field Office information used in the review

process. The documentation may be filed in any manner desired,

provided that a local procedure is established for identifying

confirmation information for each Form SAMS-1100.

15-21 CPO Responsibility. In all cases, the CPO shall review

documentation regarding deposit confirmation actions and shall

ensure that the local procedures applied were thorough and complete.

If the confirmation action is found to be insufficient, the CPO

shall indicate the additional action that is required. All action

on unconfirmed deposits and deposits with discrepancies shall be

completed within 30 calendar days from the time the deposit was

mailed to HUD\'s lockbox.

15-22 Dishonored Deposits.

A. Field Office Notification. HUD\'s contractor for SAMS receives

notification if a collection sent for deposit is not honored.

Upon being notified of the dishonored deposit, HUD\'s contractor

for SAMS will notify the appropriate CPO. The notification, in

the form of a memorandum, will identify the applicable case

number and will include the remittance originally deposited.

The CPO shall contact the individual or organization that

remitted the original deposit to HUD, and arrange for another

remittance immediately.

B. Collection of Funds. If the funds are collected, a new Form

SAMS-1100 shall be prepared by the Field Office to deposit the

remittance, following procedures outlined in paragraph 15-12 of

this chapter.

15-23 Collection of Debts Owed to HUD. Instances may arise where Field

Offices are required to bill for and collect miscellaneous debts

owed to HUD. Examples are disallowed expenditures, dishonored

deposits, or penalties for liquidated damages that are not paid

promptly. Policy and procedures for collection of debts incurred in

the normal course of business is described in Chapter 17. See

Chapter 7 for policy and procedures applicable to the collection of

tenant rent. When funds are collected, the Field Office shall

follow the procedures described in this chapter.

15-24 Processing Earnest Money Collections.

A. Earnest Money Deposit Requirements. Selling brokers (including

ELBs) are required to collect from potential purchasers the

full amount of earnest money specified by HUD when a sales

contract is submitted to HUD. Earnest money deposits must be

in the form of a

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4310.5 REV-2

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cashier\'s check, certified check, or money order. Selling

brokers must certify on the sales contract that they are in

compliance with HUD\'s earnest money deposit policy.

B. Holding Earnest Money Deposits. HUD alone determines the party

which will hold the deposit pending closing of the sale. The

eligible parties are:

1\. Closing Agents Under Contract to HUD. To be held in the

contractor\'s trust account.

2\. Selling Broker (including ELB). To be held in the

broker\'s escrow account which has been established

according to state and/or local law and is monitored by

the state or local regulatory body.

3\. Field Office. To be deposited via Form SAMS-1100 upon

acceptance of a sales contract. If an earnest money

deposit is received by the Field Office which should have

been directed to the closing agent or selling broker, it

shall be accepted and processed as described in paragraph

15-12. If the sales contract has been rejected, follow

procedures shown in Chapter 10. The deposit may be

returned to the submitting party.

C. Earnest Money Forfeitures on a Cancelled Sale.

1\. If the Closing Agent Holds the Earnest Money. If any part

of the earnest money is to be forfeited to HUD, the

closing agent shall be instructed to use a Form SAMS-1100,

Cash Transmittal Form, for depositing the funds at HUD\'s

lockbox. This requires that Form SAMS-1100, along with

required procedures for completing the form, be included

in the written instructions sent to the closing agent.

The closing agent shall show post code \"EF\" on the

completed Form SAMS-1100. The closing agent shall be

instructed to forward Copy 2 of the completed Form

SAMS-1100 to the Field Office.

2\. If the Field Office Deposited the Earnest Money.

a\. If any portion of the earnest money is to be

forfeited, the Field Office shall prepare a Form

SAMS-1120, Funds Reclassification, and forward the

completed form to the Real Property Branch. The

amount forfeited shall be shown on the Form SAMS-1120

as a transfer from post code \"EM\" to post code \"EF.\"

The Real Property Branch will take action to

reclassify the deposit. Reclassification procedures

are outlined in paragraph 15-19. Procedures for

refunding earnest monies to the purchaser can be

found in Chapter 16.

b\. If the purchaser of the property is indebted to HUD

for rent and it is determined that the earnest money

deposit is available for refund, it may be applied

against the rental indebtedness without the consent

of the debtor, provided the parties who executed the

Form HUD-9532, Lease, and the Form HUD-9548, Sales

Contract, are identical. In such cases, a Form

SAMS-1120 shall be sent to the Real Property Branch

for reclassification action. The Form SAMS-1120

shall show a transfer from post code \"EM\" to post

code \"RT.\"

3\. If the Selling Broker Holds the Earnest Money. If a

selling broker is holding the earnest money that is to be

forfeited to HUD, the CPO shall instruct the selling

broker to send the funds and advice explaining the nature

of the remittance to the CPO.

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15-7 5/94

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4310.5 REV-2

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Chapter 15 - Exhibit

COLLECTIONS FOR SINGLE FAMILY ACQUIRED PROPERTIES

Received By

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Closing

Agent/

Post Field Property Selling

Type of Collection Code Office Manager Broker

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\_\_\_\_\_\_\_ \_\_\_\_\_\_\_

Collections Not Identified

With A Specific Property

(Allocated) AF X X X

Homestead Sales, Collections AH X X

Other Single Family Sales AT X X

Earnest Money Forfeitures EF X X

Earnest Money Receipts EM X X

Sales Extension Fees EX X X

Insurance IS X

Late Fee LF X

Miscellaneous Sales Expense

Recovery MC X X

Miscellaneous Income,

Other Than Tenant MI X

Refunds on Miscellaneous

Major Repairs MR X X

Miscellaneous Income, Tenant MS X X

Prompt Payment Penalty Collection P3 X

Preservation & Protection

Recoveries PP X

Prepaid Rent PR X X

Rent RT X X

Termite Inspection Fee Refunds TR X X

Tax Refunds TX X

Utility Refunds UT X

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5/94 15-8