September 20, 2002

> **MORTGAGEE LETTER 2002-19**

**TO: ALL APPROVED MORTGAGEES**

**ATTENTION: Single Family Servicing Managers**

# SUBJECT: Clarification Regarding Title Approval issues, 

#  Property Condition at Conveyance, Administrative Offsets

#  and a New Process for Lender Appeal of Conveyance Issues. 

# 

Over the past several months, industry representatives have made
recommendations to the Department in various forums, including servicing
conferences, regarding policy and procedure issues. This mortgagee
letter provides clarification of issues relating to title approval,
property condition at conveyance and administrative offsets. The lender
appeal process relative to conveyance issues is also addressed in this
mortgagee letter. The effective date is thirty days from the date of
this mortgagee letter.

######## Title Approval Issues

## Unpaid Taxes

> In most states unpaid taxes are given priority over first mortgages of
> record. Because taxes are generally paid in arrears, they constitute a
> lien on property even when they are not yet due and payable. Lenders
> must request and pay all available tax bills prior to conveyance. HUD
> regulation 24 CFR 203.402 (a) provides the authority for HUD to
> reimburse 100 percent of the taxes paid. However, because payment of
> taxes is the responsibility of the lender, late fees and/or interest
> penalties charged by the taxing jurisdiction for the late payment of
> taxes are not reimbursable.
>
> Where taxes, late fees and/or interest penalties are owed to the
> taxing jurisdiction, HUD has instructed its Management and Marketing
> (M&M) contractors to pay the amounts due and recover any late fees and
> interest penalties from the lender through the debt collection and
> administrative offset process. Although HUD is also instructing its
> M&M contractors not to withhold title approval due to the late payment
> of taxes, lenders are on notice that failure to pay taxes when due is
> a violation of HUD's servicing requirements.
>
> As incidents of non-compliance are noted, supporting documentation
> will be collected and forwarded to the National Servicing Center (NSC)
> in Oklahoma City, Oklahoma. NSC will track and monitor reported
> violations and refer lenders who exhibit a pattern of non-compliance
> to the Office of Lender Activities for appropriate action including
> possible referral to the Mortgagee Review Board (MRB).

## Unpaid Water, Sewer or Other Assessments 

> Lenders are expected to research the payment status of water, sewer,
> and other assessments and provide this information to the M&M
> contractor with other title evidence. However, M&M contractors may not
> withhold title approval because the title evidence reflects unpaid
> water, sewer, or other assessments, even when these expenses
> constitute a lien against the property.

# [Condominium/Homeowners' Association (HOA) Fees]{.underline} 

> At this time, condominium and homeowners' association (HOA) fees are
> not required escrow items for FHA-insured single-family mortgages.
> Therefore, payment of condo/HOA fees as they become due is the
> mortgagor's responsibility. When the mortgagor defaults and
> foreclosure action becomes necessary, lenders must name and properly
> serve HOAs and condominium associations in the foreclosure proceedings
> in order to eliminate or reduce HUD's responsibility for unpaid
> condominium/HOA fees. Further, lenders must take any action necessary
> to protect HUD's interest in the property against foreclosure actions
> brought by a condominium/HOA.
>
> Upon completion of the foreclosure sale, lenders are required to
> notify the appropriate condominium/HOA of the lender's interest in the
> property and to pay post-foreclosure condominium/HOA assessments in a
> timely manner. HUD will reimburse lenders 100 percent of payments for
> condominium or HOA fees incurred between the date of foreclosure and
> conveyance. However, lenders may not claim reimbursement for any
> penalties, interest and/or late fees incurred after the foreclosure
> sale.
>
> At the present time, HUD has instructed its M&M contractors **not** to
> withhold title approval if title evidence reflects delinquent
> condominium/HOA assessments, interest, late payment penalties, and/or
> legal fees incurred anytime prior to the date of conveyance. This
> current position is applicable in all states. Instead, the M&M
> contractor will pay the amounts due and recover any late fees,
> interest and /or penalties properly chargeable to the lender through
> debt collection and the administrative offset process.
>
> However, in cases where the timeframe between the date of foreclosure
> and conveyance is 45 days or less, it may be difficult for the lender
> to arrange payment of condominium/HOA fees that accrue following
> foreclosure. When conveyance takes place within 45 days of the date of
> foreclosure, HUD will not seek reimbursement for interest, late
> payment penalties, and/or legal fees related to amounts due from the
> date of foreclosure forward.
>
> For those states where unpaid condo/HOA assessments constitute a
> priority lien against the property, lenders must first attempt to
> negotiate with the condo/HOA to
>
> waive or accept reduced payments for delinquent fees. Should the
> negotiations prove unsuccessful, lenders should pay all
> condominium/HOA fees prior to conveyance,
>
> whether or not the association has filed a lien.
>
> Also, in non-priority states, HUD may request that the lender
> voluntarily pay delinquent condo/HOA fees to ensure the viability of
> the homeowner's association, which in turn will assist in maintaining
> property values and may also reduce future mortgage insurance claims.
> For these same reasons, HUD will not object if lenders voluntarily pay
> delinquent condo/HOA fees that were the responsibility of the former
> borrower to pay.
>
> Condominium/HOA fees paid by the lender are 100 percent reimbursable
> to the lender in accordance with 24 CFR 203.402(j). Lenders may also
> claim reimbursement for penalties, interest, and/or late fees incurred
> by the former mortgagor and paid by the lender. However, as noted
> above, reimbursement will not be made for penalties, interest, or late
> fees incurred after the date of the foreclosure sale. When filing a
> claim, the lender should use Line 111 on Part B of form HUD-27011 and
> Line 307 on Part D of form HUD-27011.

## Internal Revenue Liens

> When the Internal Revenue Service (IRS) has filed a lien against a
> property with an FHA-insured mortgage, the lender must provide
> appropriate notice to the IRS prior to the foreclosure sale. When a
> lender gives proper notice to the IRS, the Department will not object
> to the outstanding right of redemption by IRS, (see 24 CFR
> 203.389(o)). Lenders must include a copy of this notice with title
> evidence submission. M&M contractors have been instructed not to
> withhold title approval, even if the lender has not provided proper
> notice to the IRS.
>
> However, when a lender fails to deliver proper notice to the IRS, the
> Department must take action to protect its interest. The M&M
> contractor must attempt to obtain a discharge of the tax lien, which
> requires a fair market value appraisal. When such action is required,
> the cost of the appraisal will be billed to the lender. Such action by
> the Department is consistent with the requirements of 24 CFR 203.391.
> If the lender prefers not to reimburse the Department for the
> appraisal cost that will be required in order to protect the
> Department's interest in the property, the lender shall so advise the
> M&M contractor and title will be rejected and the property re-conveyed
> to the lender.

## Code Violations

> Often, mortgagors who have become delinquent in their mortgage
> obligation have deferred maintenance on their property. In some
> situations, the obvious peeling paint, loose gutters, rotting trim,
> lifting roof shingles, and related problems have been brought to the
> attention of the city or county which then makes a request for
> immediate correction of said items. Where corrective action is not
> taken, the jurisdiction may seek legal
>
> recourse to ensure correction, such as issuance of a code violation
> notice. Code violations can reduce the marketability of the title. The
> following guidance has been developed for lenders to address the more
> common judicial and administrative matters regarding code violation
> notices:

• [Liens Extinguished Through Foreclosure]{.underline} -- In instances
where a locality has recorded a subordinate lien in the land records as
a result of code violations and the lien, under state law, may be
extinguished through the foreclosure action, lenders must ensure that
they follow the proper foreclosure process to extinguish the lien.

• [Lien Survives Foreclosure -- Deed is Transferable]{.underline} -- In
instances where a subordinate lien resulting from code violations is not
extinguished by foreclosure, lenders may convey title subject to the
lien if: (1) the code violation does not predate the origination of the
loan; and, (2) ***the code violation did not result in whole or in part
from failure of the lender to preserve and protect the property in
accordance with HUD's requirements.*** If the code violation was issued
prior to the date the lender had possession, it is unlikely that the
code violation was due to the lender's failure to preserve and protect
the property. Where there is evidence that the code violation was issued
after the lender gained possession **and** was the result of the lender
failing to preserve and protect the property, the M&M contractor has
been instructed to reject the title and require the lender to satisfy
the code violation without reimbursement. If there is any question of
responsibility, the M&M contractor will request, and the lender must
provide evidence of when, and to whom, the code violation was issued, as
well as evidence of the nature of the violation.

• [Local Ordinance Prohibits Conveyance]{.underline} -- In instances
where a local ordinance prohibits a lender from conveying title to HUD
because of the existence of a lien resulting from a code violation, the
lender must provide the M&M contractor with a copy of the ordinance that
prohibits conveyance and the cost of the repairs or fines required to
satisfy the lien.

> In the event the lender is required to complete the repairs and
> satisfy the lien, the cost of repairs and any fines required to
> satisfy the lien will be fully reimbursable if: (1) the code violation
> does not predate the origination of the loan and, (2) the code
> violation did not result, in whole or in part, from failure of the
> lender to preserve and protect the property in accordance with HUD's
> requirements as more fully described above**.** If additional time is
> requested by the lender to convey the property, an initial extension
> may be authorized for not more than
>
> 60 days. Any additional time needed to convey the property will
> require an additional extension request from the lender including
> documentation that supports the need for more time.
>
> If the estimated cost to repair exceeds \$1000, the lender should
> include with the local ordinance information, two separate bids for
> the cost of repairs. The M&M contractor will respond and provide
> instructions to the lender within **10 calendar days.**

######### Title Approval, Corrections and Extensions

> Within **10 calendar days** of receipt of a title package from a
> lender, the M&M contractor is required to either issue a title
> acceptance letter or communicate a title rejection to the lender with
> sufficient explanation of the cause of the rejection. M&M contractors
> have been instructed not to disapprove title evidence because
> additional information or minor corrections are needed. Instead, M&M
> contractors have been advised to ask lenders to submit the additional
> information. When sufficient information to approve the title evidence
> is submitted within 10 days, the title approval letter will be issued
> showing the original receipt date in the "Date Title Received" block.
>
> If a lender does not provide the additional information within **10
> calendar days** of the request, the title evidence will be rejected
> and the date that the resubmitted, complete, title evidence is
> received by the M&M contractor will be the official receipt date for
> the title approval letter.
>
> If no determination or request for additional information is
> communicated to the lender within 10 days and title evidence is
> subsequently rejected, the lender may request that the Government
> Technical Representative (GTR) grant an extension of time.
>
> If there is a title defect in the initial title package, the title
> company generally requires the original title policy before it will
> reissue a corrected policy. If this is the case, M&M contractors have
> been instructed to return the original title package to the lender
> within **10 calendar days** of the lender's request.
>
> There are some circumstances warranting an extension of time to convey
> title. When a lender submits its request for an extension of time
> prior to the expiration of the timeframe and provides adequate
> documentation to support the request, M&M contractors have been
> advised that an extension should be granted pursuant to 24 CFR
> 203.359.

######### 

######### Mobile Home Titles

> Problems occur when a mobile home has not been included in the title
> to the land and is not being taxed as real estate. If the mobile home
> title issued by the jurisdictional Department of Motor Vehicles has
> not been surrendered or purged, subsequent owners of the property
> might find that they have title to the land but not the improvements.
>
> HUD will expect additional documentation in the title evidence for all
> mobile homes. Specifically, there must be evidence that the mobile
> home is attached to the land, is classified and taxed as real estate
> and, in accordance with the jurisdictional requirements, the "mobile
> home" title has been surrendered or purged. M&M contractors have been
> instructed to reject title evidence that is insufficient to convey
> title to both the mobile home and the land.
>
> Lenders must advise their foreclosing attorney whenever an FHA-insured
> loan secured by a mobile home is being foreclosed, as there may be
> additional requirements that must be met in conducting the
> foreclosure.

#### **Property Condition Issues**

## 

## Property Conditions At Conveyance

> Properties conveyed to HUD may not be damaged due to the lender's
> failure to preserve and protect, or by fire, flood, earthquake,
> tornado, hurricane, or for condominiums, by boiler explosion. Prior to
> conveyance, lenders must either repair damages resulting from these
> conditions or obtain prior written permission from HUD to convey the
> property in a damaged condition (24 CFR 203.378 and 24 CFR 203.379).
> The decision to accept properties in damaged condition will be made by
> the appropriate HUD GTR and will be communicated to the lender by the
> M&M contractor. Attached is a list that identifies the GTRs, Real
> Estate Owned (REO) Directors and M&M contractor representatives (see
> Attachment 1).
>
> Lenders should expect to receive HUD's decision regarding a request to
> convey property in damaged condition from the M&M contractor via email
> within **10 calendar days**. If the decision requires the lender to
> repair the property before conveyance, HUD will not reimburse the
> lender for the cost of the repairs. If permission is granted to convey
> the property in a damaged condition, the greater of any insurance
> recovery or HUD's estimated cost to complete the repairs (as
> determined by the M&M contractor) will be deducted from the mortgage
> insurance claim.
>
> If the property has suffered damage that is not caused by fire, flood,
> earthquake, tornado, hurricane, or for condominiums, boiler explosion,
> lenders **must** follow the claim submission instructions in the
> Claims Handbook 4330.4. These instructions require lenders to provide
> an explanation in the "Mortgagee's Comments" section of form
> HUD-27011, Part A, and to attach documentation supporting the
> preservation and protection work performed on the property to the copy
> of the claim being forwarded to the M&M contractor. This will minimize
> conflicts regarding liability for property damages.
>
> If a lender conveys a damaged property without providing the required
> documentation, M&M contractors have been instructed to promptly
> request this information from the lender. HUD will not automatically
> request re-conveyance or reduction of claim benefits unless the lender
> is unable to provide the required documentation within 10 days of the
> request.
>
> If a property is conveyed damaged without approval, or if HUD disputes
> the lender's assertion that the damage is not its responsibility, the
> M&M contractor is required to make a timely assessment of the damage.
> If the damage is surchargeable (as identified in 24 CFR 203.378), the
> M&M contractor will notify the lender of this finding, in writing,
> within **30 calendar days** of conveyance. Depending upon the extent
> of the damage, HUD has two options. HUD may re-convey the property or
> may reduce the insurance claim by HUD's estimate of the cost to
> correct the surchargeable damage. If the property is re-conveyed, the
> lender must comply with the requirements of 24 CFR 203.362 in the
> withdrawal of the claim and must also reimburse HUD for property
> expenditures in accordance with the requirements of 24 CFR 203.364.
>
> If the lender disagrees with HUD's decision to re-convey, the lender
> will have
>
> **10 calendar days** from the date of HUD's email to appeal the
> re-conveyance decision (refer to Property Condition and Re-Conveyance
> Appeals).

**[Mortgagee Neglect]{.underline}**

> HUD defines mortgagee neglect as a failure to inspect, preserve and
> protect the property, or initiate foreclosure within the required
> timeframe (including any approved or automatic extensions). HUD has
> provided its M&M contractors with the following guidance for
> establishing mortgagee neglect:

-   The mortgage was insured after January 1, 1977.

-   After default and prior to conveyance, the lender was aware that the
    property was vacant or abandoned or should reasonably have known
    about the vacancy.

-   Damage occurred due to the lender's failure to take reasonable
    measures to inspect, protect and preserve the property, as defined
    by the Department in handbooks, Mortgagee Letters, notices, and
    specific conveyance instructions.

> When a lender's failure to properly preserve and protect results in
> damage to
>
> the property, (e.g. roof leak results in interior damage and the
> property is conveyed to HUD without prior approval), HUD may either
> re-convey the property to the lender or seek reimbursement from the
> lender for the cost of repairs (24 CFR 203.379(c)). If the cost of
> repair is equal to or less than \$2,500, HUD will reduce the claim
> payment by the cost to repair the property damage.
>
> If the repairs exceed \$2,500, HUD may require that the property be
> re-conveyed. Re-conveyance decisions will be made by a HUD GTR and
> will be communicated to the lender by the M&M contractor within **30
> calendar days** of the initial conveyance date. Communication will be
> via email with concurrent written confirmation by U.S. mail. Lenders
> may appeal this decision (see Property Condition and Re-Conveyance
> Appeals).
>
> HUD has provided guidance to both HUD staff and the M&M contractors in
> a Housing Notice. The Housing Notice covers the same issues addressed
> in this mortgagee letter with additional guidance relating to what
> items are considered surchargeable or billable.
>
> Specifically, HUD has instructed M&M contractors not to request
> reimbursement or re-conveyance for non-billable (non-surchargeable)
> items. Additionally, at this time, the Department does not permit
> re-conveyance for preservation and protection work that should have
> been, but was not completed prior to conveyance (such as lawn mowing)
> if the expense was not included on the lender's claim for insurance
> benefits, unless failure to complete the required preservation and
> protection caused damage to the property.
>
> Lenders are reminded of their responsibility to fulfill all HUD
> servicing requirements including preservation and protection
> responsibilities. As with other incidents of non-compliance, HUD will
> collect and forward supporting documentation to the NSC. The NSC will
> monitor violations and refer lenders who establish a pattern of
> non-compliance to the Office of Lender Activities for appropriate
> actions including possible referral to the MRB.

## Demolition Notices and Reimbursements

> Lenders must forward copies of all notices pertaining to demolition
> orders and notices of demolition hearings to the M&M contractor
> immediately upon discovery and prior to conveyance and application for
> insurance benefits. Within **10 calendar days** of receiving the
> notice, the M&M contractor will obtain a decision from the appropriate
> HUD GTR and advise the lender on appropriate and necessary action,
> which may include allowing the demolition to proceed or a request for
> postponement until after conveyance to allow the Department the option
> of salvaging repairable properties. The Department will not entertain
> appeals of demolition decisions. Since demolition is an extreme
> measure, the Department expects few of these notices from lenders.
>
> Properties that are conveyed demolished without prior permission from
> the GTR will be re-conveyed. Lenders may appeal HUD's re-conveyance
> decision (refer to Property Condition and Re-Conveyance Appeals).

**[Property Condition and Re-Conveyance Appeals]{.underline}**

> The Department has established a two-stage appeal process for lender
> disputes arising from property condition and re-conveyance requests.
> Please note this is a new process designed to expedite resolution of
> disputes while providing enhanced lender protections.

**STAGE 1 -- Homeownership Center (HOC)**

> If a lender does not receive a response to any of the matters
> discussed in this section (including property repair requests and
> requests for reconsideration of re-conveyances, but not including
> matters that result in administrative offset of claims) within the
> timeframes noted, or if a lender believes that the decision of the GTR
> is not supported by regulation or circumstance, the lender may appeal
> to the REO Director at the HOC with appropriate jurisdiction.
>
> A written appeal must be received by the REO Director within **10
> calendar days** from the date the response from the GTR was due.
> Appeals received after this date will not be accepted.
>
> The REO Director will review and respond to the appeal within **10
> calendar days** from receipt. Communication will be via email or U.S.
> mail. If the appeal involves a cost to the lender of \$2,500 or less,
> the decision of the REO Director is final and further appeals will not
> be accepted.
>
> **STAGE 2 -- Office of Single Family Asset Management**
>
> If a lender does not receive a response to their appeal within the
> timeframes noted, or if a lender believes that the decision of the HOC
> is not supported by regulation or circumstance, **AND** the appeal
> involves a cost to the lender in excess of \$2,500, the lender may
> appeal to the Director of the Office of Single Family Asset Management
> (SFAM) at the address below:
>
> Department of Housing and Urban Development
>
> National Servicing Center
>
> Attn: CRC, P&P Reviews
>
> 500 West Main Street, Suite 400
>
> Oklahoma City, OK 73102
>
> The appeal must be received in writing by SFAM within **10 calendar
> days** from the date the HOC response was due. Appeals received after
> this date will not be accepted. The SFAM Director or his or her
> designee will review and respond to the appeal within **15 calendar
> days** from receipt. Communication will be via email with concurrent
> written confirmation by U.S. mail. The decision of the SFAM Director
> is final and further appeals will not be accepted.

##### Preservation and Protection Requests

## Approve/Disapprove Lender Requests to Exceed Maximum Allowable Preservation and Protection Limits

> 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 (see Mortgagee Letter 2002-10, dated
>
> May 13, 2002), the lender must request permission to exceed the
> maximum allowable expenses in writing. The lender must include with
> the request any documentation needed to substantiate the
> over-allowable expense.
>
> The M&M contractor has the responsibility to review and approve or
> disapprove over allowable requests from lenders. 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 lender
> 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 lender obtain
> additional independent bids or deny the over-allowable expense
> request, in writing, and provide a full explanation to the lender
> 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 lender's request, in writing,
> within **10 calendar days** from the date of receipt. Lenders who have
> not received a response to an over-allowable expense request within
> **10 calendar days** should contact the appropriate GTR.
>
> If the lender disagrees with the M&M contractor's decision to deny the
> request, the lender 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, to its GTR within
> **24 hours** of receipt. The GTR must respond to the lender's appeal
> request within **5 calendar days** of receipt from the M&M contractor.
> Lenders 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.

### Debt Collection and Administrative Offsets

> The debt collection and administrative offset process provides a means
> for the Department to collect money owed by lenders. For example,
> there may be situations in which the M&M contractor identifies an item
> for which the lender claimed reimbursement (e.g., winterization),
> however, the initial conveyance inspection indicates that the work
> claimed was not completed. Or, the debt may be related to property
> damage resulting from fire or mortgagee neglect.
>
> As a reminder, lenders must forward to the M&M contractor hard copies
> of the HUD-27011, Parts B, C, D and if applicable, Part E, on the same
> date as the form HUD-27011, Part B, is sent to HUD Headquarters in
> Washington, DC, for payment. On HUD's behalf, the M&M contractors are
> required to review these claims to ensure that preservation and
> protection work for which reimbursement is claimed was actually
> performed.
>
> To establish the debt, the M&M contractor must advise the lender of
> the basis for offset or surcharge and request reimbursement. HUD has
> instructed its M&M contractors to send a Demand Letter to the lender
> via email no later than **30 calendar days** after conveyance if the
> debt represents property damage, or no later than **30 calendar days**
> after Part B of the insurance claim is received by the M&M contractor
> if the debt represents expenses for preservation and protection
> services claimed but not performed. Concurrently, a copy of the Demand
> Letter will be sent to the lender through the U.S. mail. The letter
> will include the following:
>
> The amount of the debt.
>
> The reason for the debt.
>
> The required form of payment.
>
> Where the payment should be sent.
>
> The date the payment is due (30 days from date of letter).
>
> The process for disputing the charge.
>
> The lender may either remit the overpayment within **30 calendar
> days** or provide the M&M contractor with a rebuttal supported by
> documentation that the work was indeed satisfactorily completed or
> that the work was not the responsibility of the lender. If the lender
> fails to respond to the M&M contractor's Demand Letter within **30
> calendar days**, or if the lender's response to the M&M contractor is
> unpersuasive, the M&M contractor will refer the matter to the
> appropriate GTR.
>
> The GTR, upon review of the facts of the case, may either dismiss the
> matter and instruct the M&M contractor not to seek reimbursement, or
> pursuant to 24 CFR 17.102, issue a Notice of Intent to Collect by
> Administrative Offset to the lender via email with a copy sent
> concurrently through the U.S. mail. The notice must include the
> following:
>
> The nature and amount of the debt and the factual basis for the
> determination.
>
> A statement that the Secretary intends to collect the debt and all
> charges and interest by administrative offset.
>
> Notice that the lender has the right to request a Departmental review
> of the determination of indebtedness and that such requests must be
> received within **20 calendar days** of the date of the Notice of
> Intent.
>
> The address where the lender's request for review should be sent.
>
> Notice that the lender has a right to inspect and copy Departmental
> records related to the debt if requested in writing, and that the
> lender will be informed as to when the inspection and copying can be
> done, after such notice is received.
>
> Notice that the lender may enter into a written agreement with the
> Secretary to repay the debt.
>
> If no funds are received within **30 calendar days** from the date of
> the Notice of Intent to Collect by Administrative Offset, and the
> lender has not submitted a request for a Departmental review of the
> determination of indebtedness, the GTR will instruct the M&M
> contractor to contact the Single Family Claims Branch in Headquarters
> to initiate the offset action.

**[Requests for Departmental Review]{.underline}**

> If a lender disagrees with the Notice of Administrative Offset issued
> by the GTR, the Lender may request a review by the SFAM Director.

1.  The lender must submit a written request for a review of
    determination of indebtedness within **20 calendar days** from the
    date of the Notice of Intent to Collect by Administrative Offset.
    HUD will not accept requests received after this date.

2.  The appeal must include a copy of the original Demand Letter, the
    lender's initial response, if any, the Notice of Intent to Collect
    by Administrative Offset, and all documentation necessary to support
    the lender's request for review of the determination.

3.  The request must be mailed to the address indicated in the Notice of
    Intent to Collect by Administrative Offset, which in most cases will
    be to the REO Director at the HOC with appropriate jurisdiction.

4.  Upon receipt of the request, the REO Director will:

-   Provide, pursuant to 24 CFR 17.104, notice to the lender that the
    review will be conducted either on the documentary record or by
    hearing. If the review will be conducted on the record, the notice
    will include the procedures to be followed. If a hearing will be
    held, the notice will include the date, location, and procedures for
    the hearing. This notice will be delivered via email and U.S. mail.

-   Forward, within **10 calendar days** of receipt from the lender, the
    complete review package to the SFAM Director in care of the NSC.

    -   Notify the M&M contractor that the case is being appealed to
        avoid any premature issuance of an administrative offset.

> The SFAM Director or designee, will review, analyze, and evaluate all
> supporting documentation in reaching a final decision and may request
> additional background information from the M&M contractor, the HOC,
> and/or the lender to complete this review.
>
> The SFAM Director or designee will, usually within **30 calendar
> days** from the date of receipt of the request for review, receipt of
> additional background information or completion of the hearing, issue
> a written decision which shall include supporting rationale.
>
> This will constitute the Final Agency Decision and will be sent to the
> lender via email with a copy concurrently placed in the U.S. mail. The
> HOC and the M&M contractor will also receive copies of the decision.
> Upon issuance of the Final Agency Decision, no other appeals will be
> accepted.
>
> ***These clarifications are effective thirty days from the date of
> this Mortgagee Letter.***
>
> Sincerely,

[\_\_\_\_\_\_\_\_\_\_]{.underline}

John C. Weicher

Assistant Secretary for Housing-

Federal Housing Commissioner, H

Attachment

Attachment 1, Page 1

# CONTACTS FOR LENDER APPEAL

+-----------+-------+-------------+------------------+----------------+
| > [Phi    | > Con | > [M&M      | > Contact        | > HOC-GTR      |
| ladelphia | tract | > C         | > Person/        | > Contact      |
| > HOC]{.u | >     | ontractor]{ | >                | >              |
| nderline} | > [Ar | .underline} | > [Phone         |  [Person/Phone |
|           | ea]{. |             | > Num            | > Numbe        |
|           | under |             | ber]{.underline} | r]{.underline} |
|           | line} |             |                  |                |
+-----------+-------+-------------+------------------+----------------+
| > Co      | > P1  | > Citiwest  | > Adele Bell     | > Patricia     |
| nnecticut |       | >           | >                | > Peiffer      |
|           |       |  Properties | > Gary Carter    | >              |
|           |       |             | >                | > \(215\)      |
|           |       |             | > \(860\)        | > 656-0509     |
|           |       |             | > 244-2783       | > x3464        |
+-----------+-------+-------------+------------------+----------------+
| > Maine   | > P1  | > same as   | > same as above  | > same as      |
|           |       | > above     |                  | > above        |
+-----------+-------+-------------+------------------+----------------+
| > Mass    | > P1  | > same as   | > same as above  | > same as      |
| achusetts |       | > above     |                  | > above        |
+-----------+-------+-------------+------------------+----------------+
| > New     | > P1  | > same as   | > same as above  | > same as      |
| >         |       | > above     |                  | > above        |
| Hampshire |       |             |                  |                |
+-----------+-------+-------------+------------------+----------------+
| > Rhode   | > P1  | > same as   | > same as above  | > same as      |
| > Island  |       | > above     |                  | > above        |
+-----------+-------+-------------+------------------+----------------+
| > Vermont | > P1  | > same as   | > same as above  | > same as      |
|           |       | > above     |                  | > above        |
+-----------+-------+-------------+------------------+----------------+
| >         | > P2  | >           | > Shawna Corsi   | > Anna Papili  |
|  Michigan |       | Michaelson, | >                | >              |
|           |       | > Connor    | > Jackie Sanchez | > \(215\)      |
|           |       | > and Boul  | >                | > 656-0509     |
|           |       |             | > \(714\)        | > x3404        |
|           |       |             | > 230-3600       |                |
+-----------+-------+-------------+------------------+----------------+
| > Ohio    | > P2  | > same as   | > same as above  | > same as      |
|           |       | > above     |                  | > above        |
+-----------+-------+-------------+------------------+----------------+
| > West    | > P2  | > same as   | > same as above  | > Same as      |
| >         |       | > above     |                  | > above        |
|  Virginia |       |             |                  |                |
+-----------+-------+-------------+------------------+----------------+
| >         | > P3  | > First     | > Richard Watts  | > Patricia     |
|  Delaware |       | > Preston   | >                | > Peiffer      |
|           |       | >           | > \(484\)        | >              |
|           |       | Foreclosure | > 530-0700       | > \(215\)      |
|           |       | >           |                  | > 656-0509 x   |
|           |       | Specialists |                  | > 3464         |
+-----------+-------+-------------+------------------+----------------+
| >         | > P3  | > same as   | > same as above  | > same as      |
|  District |       | > above     |                  | > above        |
| > of      |       |             |                  |                |
| >         |       |             |                  |                |
|  Columbia |       |             |                  |                |
+-----------+-------+-------------+------------------+----------------+
| > New     | > P3  | > same as   | > same as above  | > same as      |
| > Jersey  |       | > above     |                  | > above        |
+-----------+-------+-------------+------------------+----------------+
| > New     | > P3  | > same as   | > same as above  | > same as      |
| > York    |       | > above     |                  | > above        |
+-----------+-------+-------------+------------------+----------------+
| >         | > P3  | > same as   | > same as above  | > same as      |
|  Virginia |       | > above     |                  | > above        |
+-----------+-------+-------------+------------------+----------------+
| >         | > P4  | >           | > Shawna Corsi   | > Anna Papili  |
|  Maryland |       | Michaelson, | >                | >              |
|           |       | > Connor    | > Jackie Sanchez | > \(215\)      |
|           |       | > and Boul  | >                | > 656-0509     |
|           |       |             | > \(714\)        | > x3404        |
|           |       |             | > 230-3600       |                |
+-----------+-------+-------------+------------------+----------------+
| > Pen     | > P5  | > Golden    | > Mike Meyers    | > Patricia     |
| nsylvania |       | > Feather   | >                | > Peiffer      |
|           |       | > Realty    | > \(916\)        | >              |
|           |       | > Services  | > 922-2264       | > \(215\)      |
|           |       |             |                  | > 656-0509     |
|           |       |             |                  | > x3464        |
+-----------+-------+-------------+------------------+----------------+

Attachment 1, Page 2

[CONTACTS FOR LENDER APPEAL]{.underline}

+------------+------+---------------+---------------+----------------+
| > [Atlanta | >    | > [M&M        | > Contact     | > HOC-GTR      |
| > HOC]{.   | Cont | > Contractor  | > Person/     | > Contact      |
| underline} | ract | ]{.underline} | >             | >              |
|            | >    |               | > [Phone      |  [Person/Phone |
|            | > [A |               | > Number      | > Numbe        |
|            | rea] |               | ]{.underline} | r]{.underline} |
|            | {.un |               |               |                |
|            | derl |               |               |                |
|            | ine} |               |               |                |
+------------+------+---------------+---------------+----------------+
| > Illinois | > A1 | > Golden      | > Shawn       | > Boris        |
|            |      | > Feather     | > Elston      | > Whiteside    |
|            |      | >             | >             | >              |
|            |      | > Realty      | > \(602\)     | > \(404\)      |
|            |      | > Services    | > 548-0084    | > 331-1263     |
|            |      |               | >             | > x2677        |
|            |      |               | > Lionel      |                |
|            |      |               | > Hotard      |                |
|            |      |               | >             |                |
|            |      |               | > \(949\)     |                |
|            |      |               | > 477-6300    |                |
+------------+------+---------------+---------------+----------------+
| > Indiana  | > A1 | > same as     | > same as     | > same as      |
|            |      | > above       | > above       | > above        |
+------------+------+---------------+---------------+----------------+
| > Kentucky | > A1 | > same as     | > Jennifer    | > same as      |
|            |      | > above       | > Cokash      | > above        |
|            |      |               | >             |                |
|            |      |               | > \(602\)     |                |
|            |      |               | > 548-0084    |                |
+------------+------+---------------+---------------+----------------+
| >          | > A1 | > same as     | > same as     | > same as      |
|  Tennessee |      | > above       | > above       | > above        |
+------------+------+---------------+---------------+----------------+
| > Alabama  | > A2 | > Best Assets | > Susan       | > Boris        |
|            |      | > / Citiwest  | > Hoffman     | > Whiteside    |
|            |      |               | >             | >              |
|            |      |               | > \(404\)     | > \(404\)      |
|            |      |               | > 768-1400    | > 331-1263     |
|            |      |               |               | > x2677        |
+------------+------+---------------+---------------+----------------+
| > Georgia  | > A2 | > Best Assets | > same as     | > same as      |
|            |      | > / Citiwest  | > above       | > above        |
+------------+------+---------------+---------------+----------------+
| > M        | > A2 | > same as     | > same as     | > same as      |
| ississippi |      | > above       | > above       | > above        |
+------------+------+---------------+---------------+----------------+
| >          | > A3 | > Southeast   | > Roger       | > Debbie       |
|  Caribbean |      | > Alliance    | > Martin      | > McMahan      |
|            |      |               | >             | >              |
|            |      |               | > \(972\)     | > \(404\)      |
|            |      |               | > 419-6921    | > 331-1263     |
|            |      |               |               | > x2073        |
+------------+------+---------------+---------------+----------------+
| > Florida  | > A3 | > same as     | > same as     | > same as      |
|            |      | > above       | > above       | > above        |
+------------+------+---------------+---------------+----------------+
| > North    | > A4 | > Michaelson, | > Shawna      | > Debbie       |
| > Carolina |      | > Connor and  | > Corsi       | > McMahan      |
|            |      | > Boul        | >             | >              |
|            |      |               | > Jackie      | > \(404\)      |
|            |      |               | > Sanchez     | > 331-1263     |
|            |      |               | >             | > x2073        |
|            |      |               | > \(714\)     |                |
|            |      |               | > 230-3600    |                |
+------------+------+---------------+---------------+----------------+
| > South    | > A4 | > same as     | > same as     | > same as      |
| > Carolina |      | > above       | > above       | > above        |
+------------+------+---------------+---------------+----------------+

Attachment 1, Page 3

[CONTACTS FOR LENDER APPEAL]{.underline}

+------------+------+---------------+---------------+----------------+
| > [Denver  | >    | > [M&M        | > Contact     | > HOC-GTR      |
| > HOC]{.   | Cont | > Contractor  | > Person/     | > Contact      |
| underline} | ract | ]{.underline} | >             | >              |
|            | >    |               | > [Phone      |  [Person/Phone |
|            | > [A |               | > Number      | > Numbe        |
|            | rea\ |               | ]{.underline} | r]{.underline} |
|            | _\_] |               |               |                |
|            | {.un |               |               |                |
|            | derl |               |               |                |
|            | ine} |               |               |                |
+------------+------+---------------+---------------+----------------+
| > Colorado | > D1 | > First       | > Kelly       | > Dora DeVan   |
|            |      | > Preston     | > Oswald      | >              |
|            |      | > Foreclosure | >             | > \(303\) 672  |
|            |      | > Specialists | > \(972\)     | > 5298 x1537   |
|            |      |               | > 788-0026    |                |
+------------+------+---------------+---------------+----------------+
| > New      | > D1 | > same as     | > same as     | > same as      |
| > Mexico   |      | > above       | > above       | > above        |
+------------+------+---------------+---------------+----------------+
| > South    | > D1 | > same as     | > same as     | > same as      |
| > Dakota   |      | > above       | > above       | > above        |
+------------+------+---------------+---------------+----------------+
| > Texas    | > D1 | > same as     | > same as     | > same as      |
|            |      | > above       | > above       | > above        |
+------------+------+---------------+---------------+----------------+
| > Utah     | > D1 | > same as     | > same as     | > same as      |
|            |      | > above       | > above       | > above        |
+------------+------+---------------+---------------+----------------+
| > Wyoming  | > D1 | > same as     | > same as     | > same as      |
|            |      | > above       | > above       | > above        |
+------------+------+---------------+---------------+----------------+
| > Iowa     | > D2 | > same as     | > same as     | > Joyce Jacoby |
|            |      | > above       | > above       | >              |
|            |      |               |               | > \(303\)      |
|            |      |               |               | > 672-5298     |
|            |      |               |               | > x1507        |
+------------+------+---------------+---------------+----------------+
| >          | > D2 | > same as     | > same as     | > same as      |
|  Minnesota |      | > above       | > above       | > above        |
+------------+------+---------------+---------------+----------------+
| > Montana  | > D2 | > same as     | > same as     | > same as      |
|            |      | > above       | > above       | > above        |
+------------+------+---------------+---------------+----------------+
| > Nebraska | > D2 | > same as     | > same as     | > same as      |
|            |      | > above       | > above       | > above        |
+------------+------+---------------+---------------+----------------+
| > North    | > D2 | > same as     | > same as     | > same as      |
| > Dakota   |      | > above       | > above       | > above        |
+------------+------+---------------+---------------+----------------+
| >          | > D2 | > same as     | > same as     | > same as      |
|  Wisconsin |      | > above       | > above       | > above        |
+------------+------+---------------+---------------+----------------+
| > Arkansas | > D3 | > same as     | > Carol       | > same as      |
|            |      | > above       | > Stover      | > above        |
|            |      |               | >             |                |
|            |      |               | > Patty Doll  |                |
|            |      |               | >             |                |
|            |      |               | > \(303\)     |                |
|            |      |               | > 830-0777    |                |
+------------+------+---------------+---------------+----------------+
| > Kansas   | > D3 | > same as     | > same as     | > same as      |
|            |      | > above       | > above       | > above        |
+------------+------+---------------+---------------+----------------+
| >          | > D3 | > same as     | > same as     | > same as      |
|  Louisiana |      | > above       | > above       | > above        |
+------------+------+---------------+---------------+----------------+
| > Missouri | > D3 | > same as     | > same as     | > same as      |
|            |      | > above       | > above       | > above        |
+------------+------+---------------+---------------+----------------+
| > Oklahoma | > D3 | > same as     | > same as     | > same as      |
|            |      | > above       | > above       | > above        |
+------------+------+---------------+---------------+----------------+

Attachment 1, Page 4

[CONTACTS FOR LENDER APPEAL]{.underline}

+-----------+------+----------------+---------------+----------------+
| > [Santa  | >    | > [M&M         | > Contact     | > HOC-GTR      |
| > Ana     | Cont | > Contracto    | > Person/     | > Contact      |
| > HOC]{.u | ract | r]{.underline} | > [Phone      | >              |
| nderline} | >    |                | > Number      |  [Person/Phone |
|           | > [A |                | ]{.underline} | > Numbe        |
|           | rea] |                |               | r]{.underline} |
|           | {.un |                |               |                |
|           | derl |                |               |                |
|           | ine} |                |               |                |
+-----------+------+----------------+---------------+----------------+
| >         | > C1 | > Golden       | > Shawn       | > Virginia     |
|  Southern |      | > Feather      | > Elston      | > Howell       |
| >         |      | > Realty       | >             | >              |
| > C       |      | > Services     | > \(602\)     | > \(888\)      |
| alifornia |      |                | > 548-0084    | > 827-5605     |
|           |      |                | >             | > x3552        |
|           |      |                | > Jennifer    |                |
|           |      |                | > Cocash      |                |
|           |      |                | >             |                |
|           |      |                | > \(602\)     |                |
|           |      |                | > 548-0084    |                |
+-----------+------+----------------+---------------+----------------+
| >         | > C2 | > Golden       | > same as     | > Charlene     |
|  Northern |      | > Feather      | > above       | > Dombrosky    |
| > Ca      |      | > Realty       |               | >              |
| lifornia/ |      | >              |               | > \(888\)      |
| >         |      | > Services     |               | > 827-5605     |
| >         |      |                |               | > x3553        |
|  Northern |      |                |               |                |
| > Nevada  |      |                |               |                |
+-----------+------+----------------+---------------+----------------+
| > Idaho   | > C3 | > Golden       | > same as     | > same as      |
|           |      | > Feather      | > above       | > above        |
|           |      | > Realty       |               |                |
|           |      | > Services     |               |                |
+-----------+------+----------------+---------------+----------------+
| > Oregon  | > C3 | > same as      | > same as     | > same as      |
|           |      | > above        | > above       | > above        |
+-----------+------+----------------+---------------+----------------+
| > W       | > C3 | > same as      | > same as     | > same as      |
| ashington |      | > above        | > above       | > above        |
+-----------+------+----------------+---------------+----------------+
| >         | > C4 | > First        | > Mary DeWann | > same as      |
|  Arizona/ |      | > Preston      | >             | > above        |
| >         |      | > Foreclosure  | > \(602\)     |                |
| >         |      | > Specialists  | > 995-3900    |                |
|  Southern |      |                | > x14         |                |
| > Nevada  |      |                | >             |                |
|           |      |                | > Christy     |                |
|           |      |                | > Seitz       |                |
|           |      |                | >             |                |
|           |      |                | > \(714\)     |                |
|           |      |                | > 241-1096    |                |
+-----------+------+----------------+---------------+----------------+
| > Ha      | > C5 | > Pemco        | > Kimiko      | > Virginia     |
| waii/Guam |      |                | > Yamamoto    | > Howell       |
|           |      |                | >             | >              |
|           |      |                | > \(808\)     | > \(888\)      |
|           |      |                | > 949-0414    | > 827-5605     |
|           |      |                | > x108        | > x3552        |
+-----------+------+----------------+---------------+----------------+
| > Alaska  | > C6 | > Michaelson,  | > John Van    | > Charlene     |
|           |      | > Connor and   | > Meter       | > Dombrosky    |
|           |      | > Boul         | >             | >              |
|           |      |                | > \(714\)     | > \(888\)      |
|           |      |                | > 230-3600    | > 827-5605     |
|           |      |                |               | > x3553        |
+-----------+------+----------------+---------------+----------------+

> Attachment 1, Page 5

[CONTACTS FOR LENDER APPEAL]{.underline}

+----------------------+-----------------------+-----------------------+
| > [HOC]{.underline}  | > [REO                | > [Phone              |
|                      | >                     | > number]{.underline} |
|                      | Director]{.underline} |                       |
+----------------------+-----------------------+-----------------------+
| > Philadelphia       | > Cheryl Walker       | > 215-656-0509 x3418  |
+----------------------+-----------------------+-----------------------+
| > Atlanta            | > Janice Cooper       | > 404-331-5001 x2145  |
+----------------------+-----------------------+-----------------------+
| > Denver             | > Nancy Sullivan      | > 303-672-5298 x1526  |
+----------------------+-----------------------+-----------------------+
| > Santa Ana          | > Tom Rose            | > 888-827-5605 x3554  |
+----------------------+-----------------------+-----------------------+