DS News

59 guidance. e Handbook defines P&P actions as "maintenance, security, and repair work required by HUD in order to ensure the Property meets HUD's conveyance condition standards." [Handbook III.A.2.t(ii) (c)] Conveyance Timeframes are not related to the maintenance, security, and repair work, and thus, are not P&P actions. A mortgagee's failure to meet Conveyance Timeframes has no impact on whether P&P actions are performed in accordance with HUD guidance because Conveyance Timeframes are not P&P actions. Furthermore, section IV.A.2.a.ii.(D)(3) of the Handbook identifies the specific HUD guidance used to "evaluate all claimed costs for P&P." e guidance used to evaluate all claimed P&P costs is hyperlinked to section III.A.2.(t)(ii)(C), titled "Mortgagee [P&P] Action." Unsurprisingly, the guidance in this section excludes any reference to the Conveyance Timeframe. Instead, the applicable guidance only addresses the physical condition of the property, repair expectations, and related documentation. Consequently, in addition to Conveyance Timeframes not being P&P actions, Conveyance Timeframes are outside the scope of the HUD guidance used to evaluate whether mortgagees may claim P&P expenses. Mindful that other sections of the Handbook may limit the language referenced above, we expanded our search of the CFRs and HUD's guidance to instances when mortgagees must self-curtail. e Handbook requires mortgagees to self-curtail P&P expenses in only one circumstance—"when Reasonable Diligence Timeframes or reporting requirements are not met." [Handbook 4000.1 III.A.2.r.i(E)] Like the distinction between the Conveyance Timeframe and the date of conveyance, it is important to distinguish the Conveyance Timeframe from Reasonable Diligence Timeframes and reporting requirements. Reasonable diligence and reporting requirements relate to prosecuting the foreclosure and notifying the secretary of the proceedings (collectively Foreclosure Timeframes), not the amount of time allotted to convey properties. [See 24 CFR § 203.356(a),(b)] e Handbook's express requirement that mortgagees self-curtail P&P expenses if Foreclosure Timeframes are not met, but not if Conveyance Timeframes are not met, compels the conclusion that mortgagees are not required to self-curtail P&P expenses if the Conveyance Timeframes are not met. Despite the foregoing, some have urged that 24 CFR § 203.402(g)(2) prohibits servicers from claiming P&P expenses after the Conveyance Timeframe. is regulation represents the federally mandated, minimum floor of benefits that HUD must provide to mortgagees. It does not limit or prohibit HUD from extending benefits beyond the minimum requirements. If we assume § 203.402(g)(2) limits HUD's ability to extend benefits, absurd results follow–including rendering accepted industrywide claim practices materially noncompliant with other federal regulations and the Handbook. For example, the text of § 203.402(g) extends benefits to "reasonable payments made by the mortgagee" for the purpose of preserving the property prior to the Conveyance Timeframe. If we strictly interpret § 203.402(g)(2), the triggering event that must occur prior to the Conveyance Timeframe is that payment must be made. Meaning, mortgagees would be prohibited from claiming P&P actions performed prior to the Conveyance Timeframe if payment is made after the Conveyance Timeframe. We are unaware of any servicer that observes this interpretation in its day-to-day practices, nor do we believe HUD intends for servicers to comply with such a narrow interpretation. For these reasons, mortgagees are permitted to claim P&P expenses incurred outside the Conveyance Timeframe if other unrelated criteria are met. We want to extend our sincerest gratitude to e Hon. Brian Montgomery, Joseph Gormley, and countless other representatives at HUD for listening, taking action, and clearing up this longstanding misconception. Baker Breedlove is General Counsel for the Insight One Solutions Family of Companies: MSI, Williams & Williams Real Estate Auctions, and I Property Claims (IPC). In this role, Breedlove serves as principle legal counsel to the company, its subsidiaries, senior management, and the board of directors on a wide array of legal and regulatory issues. Additionally, Breedlove is the President of IPC, a premier provider in hazard A mortgagee's failure to meet conveyance timeframes has no impact on whether P&P actions are performed in accordance with HUD guidance because conveyance timeframes are not P&P actions.

• Cover