Adjuster Scope - An estimate prepared by an insurance adjuster (estimator) addressing specific damages covered by an insurance policy.
Adverse Occupants – Occupants who are in possession of a HUD owned or Custodial property without the legal right to be there.
Acquisition
– The process through which a real property or mortgage note secured by
a real property is conveyed to HUD. Properties and mortgage notes are
conveyed (acquired) from a number of sources.
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Broken Window –
A pane of glass that has a visible opening that permits entry or
exposure to the elements or which is so badly cracked as to constitute a
hazard, e.g. a window with a crack that divides a single pane into two
or more pieces.
Broker price opinion (BPO) - Estimate of probable selling price of a residential property based on selling prices of comparable properties in the area.
Cash For Keys - When the bank or servicer is willing to pay the occupant of a property to vacate by a certain date.
Convey Condition or Conveyance Condition
- The standards a property has to meet to be considered ready for
conveyance, meaning it must be undamaged by any surchargeable event,
such as earthquake, flood, tornado, hurricane or fire. Many of the
properties you will be working on are HUD guaranteed loans. The Dept of
HUD requires a property to be in conveyance condition before they will
allow the mortgagee (aka the lender) to transfer the property over to
them so they can be reimbursed as per HUD's mortgage guarantee
program. For a property to be in convey condition, the house and any
outbuildings (garage, shed) must be secured with locksets that are coded
to the proper key codes which are determined by which bank you are
dealing with, all windows must either have all glass reglazed or be
properly boarded (more on correct bank boarding techniques later), all
exterior debris and health hazards must be removed (see definition of
health hazards later in this section), any damages to the property which
can cause future damage have been repaired, grass needs to be cut if it
is grass cut season, the house must be properly winterized (if in
season), no safety hazards, and there can be no known code violations.
This is one of the most confusing areas of the entire business. I
suggest that you spend some time researching the Dept of HUD's website
for additional information about this very important term.
Cracked Window –
A pane of glass that is still intact but may have slight imperfections
that do not amount to an opening in the glass or do not constitute a
hazard, e.g. a pane of glass that has been damaged but not broken and
there is no danger of falling glass or weather damage to the property.
Days – Unless otherwise specified, all references to "days" mean calendar days.
Deteriorated Paint – Any interior or exterior painted surface that exhibits cracking, scaling, chipping, peeling, or loose paint.
Defective Service –
A service or deliverable that does not meet the performance standard
specified in the contract for a specific performance requirement.
Electronic Portal –
A secure, electronic web-based system accessible to the Prime
Contractor and Subcontractor for transferring report files, photographs
and information.
Emergency Contact Sign – A visible sign on the property that provides a toll free, 24-hour telephone number to report emergencies.
Existing Property –
A property that had been assigned to a former Contractor. These
properties have usually been inspected, appraised (or orders for
appraisals have been placed), and initial property maintenance services
have been performed. These properties may be HUD-owned properties of
HUD-custodial properties.
FHA – Federal Housing Administration, an organizational unit within HUD.
Fire Damage
- Damage caused by fire or smoke. This type of damage can be minimal or
it can be so extensive that the entire property needs rebuilt
Government Technical Representative (GTR) –
A HUD employee who acts as the Contracting Officer’s representative in
all matters concerning the technical aspects of a contract. The GTR is
responsible for giving Contractors technical advice and guidance related
to the work required by the contract. Moreover, the GTR is the
principal judge of a Contractor’s performance, including the quality and
timeliness of services. Appointed in writing by HUD.
Health Hazards
- Health hazards is a form of debris that has the potential to
contaminate and harm humans. Common items in this category include feces
(both human and animal), mold, dead bugs, extremely stained carpeting,
rotten food, bodily fluids, unknown chemical containers.
Held Off Market or HOM –
Those properties that HUD has determined not to offer for sale.
Properties may be held off market at any point after assignment to the
Contractor.
HUD – The U.S. Dept. of Housing and
Urban Development. The terms “Department of Housing and Urban
Development”, “HUD” and “Government” shall be synonymous and may be used
interchangeably in this contract.
HUD Owned Properties –
This refers to properties that have went through the foreclosure
process and been conveyed to HUD. HUD-owned properties are also referred
to as "Post Sale", "HUD REO" or just "HUD Homes".
Initial Services
- This is typically the very first Work Order that a client will send
to one of their Maintenance Vendors, once a property is found to be
vacant. This type of Work Order involves gaining access to the interior
of a property, installing a bank-coded lockset and lockbox for future
entry, removing debris, winterizing or lawn maintenance (depending on
which season), making sure all entry doors, windows, garages and
outbuildings are secure, documenting the condition of the property (with
photos and checklists), as well as anything that would be considered
the Mortgagor's Personal Property and especially any damages that might
delay a conveyance. Each asset management company is slightly different
in their method of operation, so all the elements involved in an Initial
Services Work Order might vary slightly one company to the next.
Maid Service
- The process of basically “cleaning” the inside of a property
including but not limited to vacuuming and mopping all floors, cleaning
all windows and light fixtures, kitchens and bathrooms, stoves, ovens
and refrigerators. This is basically a thorough cleaning of the whole
house; however, most servicing companies require their cleanup
contractors to complete a lengthy checklist and take specific photos in
order to verify that this cleaning was completed up to their standards.
Marketable Condition
- Marketable condition refers to property that is basically in “move
in” condition and ready to offer for sale with a real estate agent. This
term is normally used to describe the "end result" condition of REO
properties with the following characteristics: free of debris, free of
visible insect/rodent infestations, free of health and safety hazards,
wiped down and clean bathrooms, cabinets, refrigerators, freezers,
counter tops, and windows, free of bad smells, clean floors and carpets,
completed repairs required to correct safety hazards, completed,
approved repairs that needed to be done prior to listing the property,
free of yard trash and debris, cut grass and trimmed bushes, patched
holes, properly secured to protect the public, swimming pools and wells
that are properly secured to protect the public.
Mortgagee –
An FHA approved mortgage loan holder or mortgage loan servicer. The
bank or lender in charge of servicing the loan would be considered the
mortgagee.
Mortgagee Neglect – For a mortgage
insured on or after January 1, 1977, the failure by a mortgagee to
inspect, or take reasonable action to preserve and protect a property
securing an FHA insured mortgage, as required by 24 CFR 203.377.
Reasonable action includes initiating foreclosure within the required
time frame pursuant to 24 CFR 203.355(b).
Mortgage Field Services
- Refers to the industry of professionals who provide maintenance,
inspection and repair services to the mortgage industry, working mainly
on foreclosure houses. Also known as Property Preservation.
Mortgagor - This is the individual who borrowed funds from the lender - more commonly known as the homeowner.
Newly Assigned Property –
A property assigned to the Contractor (or Subcontractor) which has not
been previously assigned to any contractor (or Subcontractor) for
management. The Contractor (or Subcontractor) shall perform all
applicable services for this type of property. These may be HUD-Owned or
HUD-Custody properties.
Non Surchargeable Damage
- Damage to the property that is not the responsibility of the
mortgagee because it was not caused by fire, flood, earthquake,
hurricane, tornado or mortgagee neglect.
Occupied Conveyance
- A formal process through which a mortgagee receives permission to
convey an occupied property to HUD. The term may also be used as a noun
to refer to a property conveyed in this manner.
Owner Occupant – An individual purchaser who intends to use the property as his or her principal residence.
P260 –
HUD electronic monitoring system which allows approved users to access
information and store information for FHA insured property.
Property Preservation
- This term refers to the industry of professionals who provide
services to banks and asset management companies on their foreclosure
houses. Typical services provided are repair, inspection, insurance
claim management and maintenance. Also known as Mortgage Field Services.
Recently the misnomer "foreclosure cleaning" has been used to refer to
the Property Preservation industry even though cleaning is only a very
small part of the services provided by professional Property
Preservation companies. If you want to be taken seriously, you should
never refer to it as "foreclosure cleaning".
Quality Control –
Actions taken by the Contractor to control the production of supplies
and services to ensure that they conform to the performance requirements
and standards. Quality control procedures are outlined in the Quality
Control Plan (QCP) developed by the Contractor.
Real Estate Owned (REO) –
An industry term used to describe properties acquired through
foreclosure of a mortgage note. The term REO is generally used to
describe foreclosure properties that involve loans that are not FHA
insured. However, properties owned by HUD are sometimes referred to as
"HUD REO".
Reconveyance – The process of
returning a property to a Mortgagee by recording a deed in Mortgagee’s
name and seeking reimbursement for claims paid plus expenses.
Roof Damage
- Damage to the roof such as missing shingles or missing flashing that
is causing an active roof leak. Another example could be a large tree
branch that fell on the roof (If this fallen tree branch could be linked
to some type of extreme weather event then it would be classified as
storm damage).
Safety Hazards - Safety hazards
can be missing handrails, a severely sagging ceiling, flooring that may
pose a trip hazard, hanging gutters, broken steps, uncapped gas lines
and wires. You can probably think of several more just using common
sense.
Secured Properties – A property where all
windows, doors and openings are locked, boarded (where authorized), or
otherwise secured to prevent unauthorized entrance by person or animal
into any portion of the dwelling, including exterior entrances to crawl
spaces, and any other structures on the property, e.g. garages and
sheds.
Securing - This term refers to a number
of items that involve door locks replaced, all outbuildings locked, all
broken windows properly boarded according to HUD specifications.
Special Property Inspections – This is a quality assurance inspection of HUD properties performed by HUD contract inspectors.
Storm Damage
- Damage caused by flood, hail, wind, fallen trees, etc. An example
would be dented aluminum siding, fallen tree branches, roofing shingles
that have bent or blown off the roof.
Surchargeable Damage
- Damage to the property due to fire, flood, earthquake, hurricane,
tornado or other natural disaster. This includes mortgages insured on or
after January 1, 1977 due to mortgagee failure to inspect or take
reasonable action to preserve and protect vacant or abandoned
properties.
Theft/ Vandalism Damages - Damages
caused by thieves and/ or vandals such as stolen copper plumbing supply
lines, graffiti, holes in walls caused during the theft of electrical
wiring or plumbing, broken/ kicked in doors, broken windows, stolen
electrical wiring, etc. Some companies prefer that you separate these 2;
therefore, theft damage involves some type of theft and vandalism
damage is simply damage without any visible theft.
Trashout
- Removing interior and exterior debris and abandoned personal
belongings. Also known as cleanout, foreclosure cleaning and debris
removal.
Updating a Work Order
- The method your client wants you to follow in order to send them
information such as progress reports, photos, invoices, estimates, etc.
They will either have a secured website or will request that you send
the necessary info to them by e-mail.
Water Damage
- Interior damage such as water stains, water logged carpet, buckled
hardwood flooring caused by water intrusion from a leaky roof, freeze
damaged plumbing pipes, flood caused by sump pump failure. This does not
include the mold damage that appears very soon after.
