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MEMO
#5001: Monthly Walkthrough Interior Inspections - 08/14/02
Background
As you may be aware, there has been some recent discussion
between HUD and the servicers as to the interpretation of
the current guidelines regarding monthly property inspections.
The end result of all the discussion is a determination that
the performance of visual exterior inspections will no longer
be sufficient to protect our clients' interests on properties
that have been previously secured, as HUD has indicated that
the servicer can be held liable for unreported damages if
interior inspections are not performed on vacant and accessible
properties. Accordingly, once a property has been found vacant
and secured, HUD will require that subsequent monthly property
inspections include inspection of the property interior.
In order
to allow our clients to comply with this interpretation of
the guidelines, Safeguard will be providing its clients with
the option of ordering interior monthly inspections on properties
that have been found vacant and already secured.
We understand
that this change to interior inspections initially may seem
burdensome. However, as interior inspections are now being
required by the investors/insurers, we all must be prepared
to perform such inspections in order to keep our clients in
compliance with the guidelines.
Inspection
Requirements
We understand that the fee structures set by the investors
(FHA/VA/FNMA/FHLMC) for property inspections do not provide
for a full certified/licensed home inspection. Accordingly,
the interior inspection we will provide to our clients will
still based on a visual (walk-through) inspection only and
will not require any comprehensive testing or certification
of the property condition. The main emphasis and purpose of
this interior inspection is to alert the client to any visible
damages or situations that, if not addressed immediately,
could lead to damages or the issuance of a citation by the
city.
Safeguard
has developed a new inspection report form for the vacant
interior walk-through property inspections (see attached).
This form will clarify the nature of the interior inspection
to be performed and should address any concerns that the new
inspections might involve an extensive or time-consuming report.
The one-page
form clearly sets forth all the questions that must be answered
following the inspection. We have spent considerable time
reviewing the input received from our inspectors, and we believe
that the format and the inspection parameters will properly
address the guideline requirements, while limiting the scope
of the inspection to a visual walk-through. Pilot testing
indicates that it will take an inspector an average of ten
minutes to complete the inspection and fill out the update
form.
Compensation
Safeguard understands and recognizes that additional compensation
for these inspections will be necessary. At this point, neither
our clients nor the investors/insurers have increased payment
or reimbursement amounts for property inspections. Therefore,
Safeguard will be absorbing most of the initial additional
cost until changes are made in the cost allowables for these
inspections. However, because Safeguard understands that there
is some additional work required in performing interior property
inspections, we have agreed to increase the fees paid to our
inspectors for interior walk through inspections. Particular
fees will vary by region and will be negotiated individually.
Program
Initiation
Safeguard plans on initiating the vacant property inspection
program in late May. Additional information will be provided
to you as available.
Conclusion
We appreciate your cooperation in helping us to comply with
this new industry requirement. Please contact your vendor
manager at:
vm.alertresponse@safeguardproperties.com
to finalize the pricing for your region or if you have any
questions regarding the new inspection requirements.
Thank
you for your continued cooperation, hard work and dedication.
Sincerely.
Robert Klein
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