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18.7 PROPERTY MANAGEMENT METHODS AND ACTIVITIES [7 CFR 3555.306 (e)]
The servicer and Agency share a common interest to ensure that properties are managed and maintained. The Maximum Property Preservation Allowances outlines the
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maximum allowable costs for property preservation and maintenance and can be located on the USDA Training and Resource Library in the Loan Servicing section under Loss Mitigation found at https://www.rd.usda.gov/resources/usda-linc-training-resource- library/loan-servicing. Costs higher than the published amounts for maintenance and preservation may be appropriate in some extenuating circumstances such as very rural areas, extreme neglect, or large amounts of debris. Justification for the higher cost must be documented with color photos and detailed invoices and will be reviewed at the time of the loss claim.
A. Vacant or Abandoned Properties
The servicer may need to take custody of the security property when it has been determined the property is vacant or has been abandoned. The servicer must inspect the property within 30 days of this determination to confirm occupancy and document its condition. When the inspection reveals the property is vacant, the servicer should attempt to locate the borrower to determine the reason for the vacancy and take immediate action to protect the property from vandalism and the elements in accordance with local laws.
Preservation and protection requirements for custodial property are as follows:
x Perform monthly interior and exterior inspections to document the general
condition of the property and any actions required to adequately protect and preserve the property. The servicer will maintain adequate documentation to support servicing decisions.
x Take necessary actions to prevent unauthorized entry unless otherwise prohibited
by state law.
x Secure windows and doors. Boarding the property should be avoided unless it is
necessary to avert vandalism to the property. The servicer may post a notice with contact information, however, should not post large signs or take other actions that might call attention to the vacant property.
x Determine if any emergency repairs are necessary to adequately preserve and
protect the property. Emergency repairs will be completed by the servicer as quickly as possible to avoid property deterioration and does not require prior Agency approval. Servicers will retain documentation of all repairs, including photos of before and after work, for submission with any loss claim.
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x File a claim under the borrower’s insurance policy for insurable damage.
x Protect plumbing and other operating systems from freeze damage.
x Remove any interior or exterior debris that poses a health, environmental, fire, or
safety hazard. Examples include, but are not limited to, highly flammable chemicals, decaying food, dead animals, broken glass or other sharp objects, and large quantities of paint or paint products.
x Mow lawns, maintain shrubs, and perform snow removal.
x Maintain receipts and invoices for all costs incurred for preservation and
protection of custodial properties. Services associated with preservation and protection of properties must be typical and reasonable.
x Notify the insurance carrier regarding the vacancy to ensure appropriate coverage
is maintained.
A mortgage may be current or delinquent when a servicer becomes aware a borrower may have abandoned the security property. If the borrower redeems a property, the redemption amount should include all advances including emergency repairs. When an inspection reveals that the property is vacant or abandoned on a delinquent loan and liquidation is not already in process, taking custodial possession should immediately initiate the foreclosure process.