Understanding Reporting by Damage Categories

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Understanding Reporting by Damage Categories

By Joe Hummel

Joe Hummel Understanding Reporting Damages

 

Understanding Reporting by Damage Categories

By Joe Hummel

TO ASSIST IN REPORTING IMPROVEMENT, I have given perspective to reporting by understanding Insurer regulation. In this case I am focusing on HUD regulations, and reporting per compliance to Convey Condition.

All damage reported in a property is broken down into categories. These categories are used to itemized loss by category to remain congruent with Insurer categories mandated by mortgage type.

Each Servicer client requires damage reporting per category consistent with HUD ML 2010-18, all damages are reported under the following categories affecting convey based on acceptable Conveyance standards: **This is the contractors standard to be followed while working under contract in the Property Preservation Industry servicing HUD properties.

Insurer (HUD) regulation per ML2010-18:

“2. Acceptable Conveyance Condition

At the time of conveyance to HUD, a property must be undamaged by fire, flood, earthquake, hurricane, tornado, or mortgagee neglect, as set forth in and required by 24 CFR §203.378. For condominiums that were secured by mortgages insured under §234 of the National Housing Act, the property must also be undamaged by boiler explosion, as required by 24 CFR § 234.270. In addition, the property must be secured, the lawn maintained, winterized (as applicable), and interior and exterior debris must be removed with the property’s interior maintained in broom-swept condition. This includes the removal of any vehicles and removal of any personal property in accordance with local and state requirements. Mortgagees are responsible for the damage to, or destruction of, properties due to their failure to take reasonable action to secure, inspect, preserve and protect such properties.

If a property is damaged due to mold resulting from the mortgagee’s failure to protect and preserve, the mortgagee must remediate the cause of the mold and complete any other required P&P actions to minimize further mold and/or water damage prior to conveyance of the property.” **Contractors see this by way of chargebacks, and “do work at your own cost.” This is a prime focus of complaints industry wide, and it is recommended to take special precautions to prevent this from happening by reporting accurately on visits noting conditions that have changed. In the event such instances arise, the field contractor is ultimately in control of how information is collected while onsite and the client is relying on your ability to deliver a quality services, per industry requirements**

The Categories HUD describes above as Mortgagee Neglect are expanded under mortgagor neglect  on work orders contractors see to encompass the categories above, and THE ACTION NEEDED TO MITIGATE is required to satisfy the request of your clients work order, even if the repair is out of the contractors scope. All efforts are made to supply an avenue of repair, and proper notification of scope limitations avoids liability down the line.

Mortgagee Neglect damages expanded into reporting categories, and expected action to be taken by the contractor:

Mold- Source of damage and dimensions/ locations are needed- including a bid to repair.

Water Damage– Source of damage and dimensions/ locations are needed- including a bid to repair.

Roof Damage– Source of damage and dimensions/ locations are needed- including a bid to repair if allowable, and over Allowable request has been exhausted.- A call to the client is usually in order for any active leaks.

Structural- Source of damage and dimensions/ locations are needed- including a bid to repair

Freeze- Source of damage and dimensions/ locations are needed- including a bid to repair Storm- Source of damage and dimensions/ locations are needed- including a bid to repair

HUD has predetermined approval amounts for approvals based on category. Refer to ML2010-18 Exhibit B allowable matrix.

To ensure Insurer guidelines are met (HUD), Property Preservation guidelines are created by each client per specifications of the lender, in compliance with insure regulations so the contractor can complete work understanding the rules of engagement at each property. Above rules are hard to find, let alone understand. Contractor education is imperative uphold standards allow the client to continue to assign work to the contractor. Memos are created, and dispersed to each contractor to inform them of changes. Work orders are created to ensure proper information is given to adhere to the rules of reporting. This information alone does not complete the understanding needed to complete project in total compliance.

Understanding the above information increases success at each property, increasing the contractor’s profitability. If the contractor investigates properly under each category while on site, he maximizes his ability to increase his ROI- every visit. Reporting accurately increases the contractor’s ability to avoid costly penalties moving forward.

 

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