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User Manual: P260

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U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
WASHINGTON, DC 20410-8000

OFFICE OF HOUSING

May 13, 2010

MORTGAGEE LETTER 2010-18

TO:

ALL APPROVED MORTGAGEES

ATTENTION:

Single Family Servicing Managers

SUBJECT:

Update of Property and Preservation (P&P) Requirements
and Cost Reimbursement Procedures

This Mortgagee Letter provides updated consolidated property and preservation (P&P)
guidance for foreclosed properties that had been secured by FHA-insured mortgages, and provides
cross-references to the compliance requirements within HUD handbooks, regulations and current
P&P guidelines. This Mortgagee Letter:
Changes the process requirements for over-allowable expenses, including;
o Setting a per property allowable cost limit; and
o Mandating submission of all documents to the Mortgagee Compliance
Manager (MCM) through HUD‟s P260 system;
Emphasizes FHA‟s current conveyance condition standards; and also,
o Re-introduces requirements for removal of interior debris and maintain
the property in broom-swept condition; and
Reminds servicers of FHA‟s inspection requirements.
This Mortgagee Letter and its attachment (Exhibits A and B) supersede Mortgagee Letter
2008-31 (and its attachment) in its entirety.
Effective Date of Mortgagee Letter
The requirements presented herein are effective on July 13, 2010.
Changes to Over-allowable Requests
Pursuant to the guidance issued herein, a mortgagee may request over-allowable approval
from HUD only if its property and preservation costs exceed $2,500 per property. This $2,500
property and preservation amount does not include one time major repair items – e.g. roof
replacement and demolition. Exhibit B to this Mortgagee Letter lists the new maximum property
preservation allowable cost schedule, which also includes a per item cost maximum. Property and
preservation charges that exceed $2,500 per property must be pre-approved by HUD‟s MCM
through the web-based P260 internet portal. The process for over-allowable approval is described

www hud.gov

espanol.hud.gov

in Exhibit A, Section 1, page 5.
Mortgagee Compliance Manager
The MCM is the single point of contact designated by HUD to administer all mortgagee
compliance functions, including property preservation activities. For additional information
regarding the MCM, please see Mortgagee Letter 2010-16. The MCM will also audit all Single
Family Applications for Insurance Benefits, form HUD 27011, parts B-D to evaluate the claimed
amounts against the allowable charges in Exhibit B of this Mortgagee Letter to ensure that the
Department is not overcharged.
HUD’s P260 Web-based Internet Portal
P260 is the Department‟s new web-based internet portal. P260 provides mortgagees and
HUD real-time access to requests, notifications, approvals and document submissions for pre- and
post-conveyance activities. For additional information on P260, refer to Mortgagee Letter 2010-16.
Conveyance Condition Standards
At the time of conveyance to HUD, a property must be undamaged by fire, earthquake,
flood, hurricane, tornado, boiler explosions (for condominiums that were secured by mortgages
insured under §234 of the National Housing Act), or mortgagee neglect. In addition, any debris
must be removed from the interior of the property and maintained in broom-swept condition. These
standards are fully described in Exhibit A, Section 2 “Acceptable Conveyance Condition.”
Inspections
Generally, the mortgagee is responsible for three types of inspections:
Occupancy Inspections;
Initial Vacant Property Inspections; and
Vacant Property Inspections.
These inspection types are fully described in Exhibit A, Section 6 (A) “Inspections.”
Information Collection Requirements
The information collection requirements contained in this document have been approved by
the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (44
U.S.C. 3501-3520) and assigned OMB control numbers 2502-0429 and 2502-0523. In accordance
with the Paperwork Reduction Act, HUD may not conduct or sponsor, and a person is not required
to respond to, a collection of information unless the collections request displays a currently valid
OMB Control Number.

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If you have any questions concerning this Mortgagee Letter, please contact HUD‟s National
Servicing Center at (888) 297-8685. Persons with hearing or speech impairments may call via
TDD/TTY on 1-877-TDD-2HUD (1-877-833-2483).
Sincerely,

David H. Stevens
Assistant Secretary for Housing –
Federal Housing Commissioner
Attachment

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HUD/FHA Property and Preservation Guidelines
Document
Exhibit A
No.

1.
2.
3.
4.
5.
6.

7.
8.
9
10.
11.

Page
General Requirements

5-14

Title
Mortgagee Responsibility
Damage Due to Failure to Preserve and Protect (Mortgagee Neglect)
Maximum Property Preservation Allowance and Over-Allowable Expense Request
Acceptable Conveyance Condition
Conveyance of Properties
Local Requirements
Photographs
Specific Preservation Requirements
A. Inspections
B. Securing
C. Roof Repair
D. Pools, Hot Tubs and Spas
E. Boarding
F. Yard Maintenance and Snow Removal
G. Winterization Requirements
H. Demolition
Claim Submission and Documentation
Requests to Exceed Timeframes
Appeal of a Demand for Reimbursement
Record Retention
Enforcement

Exhibit B

Maximum Property Preservation Allowances

4

5
5
5
6
6
7
7
7
7
8
9
9
9
10
11
12
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15-16

Exhibit A: GENERAL REQUIREMENTS FOR PROPERTY AND PRESERVATION
OF PROPERTIES SECURED BY FHA INSURED MORTGAGES

Mortgagee Responsibility
Mortgagees shall preserve and protect foreclosed properties that were secured by FHA-insured
mortgages as required by 24 CFR § 203.377 through § 203.381 and 24 CFR § 234.270. The
decision as to what action to take to preserve and protect the property is the mortgagee‟s
responsibility and is independent of the amount that HUD reimburses. If a property that was
secured by an FHA-insured mortgage is conveyed with damage to the Secretary without prior
approval, the Department may reconvey the property or require a reduction to the claim for
insurance benefits, for the greater of the hazard insurance recovery or HUD‟s estimate of the cost of
repairing the damage.
Damage Due to Failure to Preserve and Protect (Mortgagee Neglect)
HUD will hold the mortgagee liable for property damage or destruction to vacant or abandoned
property resulting from the mortgagee‟s failure to take action to preserve and protect the property.
This failure to preserve and protect is considered mortgagee neglect. Examples of mortgagee
neglect include, but are not limited to, the mortgagee‟s failure to:
a.
b.
c.
d.
e.

Adequately verify the occupancy status of a property;
Initiate foreclosure within the required timeframe;
Obtain timely and accurate property inspections;
Promptly secure and continue to protect all vacant properties; or
Promptly notify the MCM of receipt of code violations, demolition notices and/or
take appropriate action.

Mortgagees may use any qualified individual or firm to perform P&P services on properties that
were secured by FHA-insured mortgages; however, the mortgagee remains fully responsible to
HUD for its actions and the actions of its agents, individuals and firms that performed such services.
1.

Maximum Property Preservation Allowance and Over-Allowable Expense Request

The maximum property preservation allowance is the maximum reimbursement for all P&P
expenses on an individual property without MCM approval. Maximum amounts for individual
items are set forth in Exhibit B- “Maximum Property Preservation Allowance”. All reimbursements
are subject to the maximum allowable amounts.
If the total P&P expense exceeds the $2,500 maximum cost limit in Exhibit B, the mortgagee may
submit an over-allowable request in the „Conveyance Overallowables Screen‟ (an electronic version
of Form HUD-50002, Request to Exceed Cost Limits), via the web-based P260 portal. The
mortgagee must upload all supporting documentation into P260, including a detailed description of
what actions were taken, along with verifiable, auditable documentation which includes an itemized
list of the repairs, materials used, room dimensions, receipts, and photographs. The MCM will
5

review the requests and supporting documentation and approve, deny or adjust the requested P&P
allowance utilizing an industry standard cost estimator. The mortgagee must obtain the MCM‟s
decision, which is recorded in P260. Requests must be submitted at least five (5) business days
prior to the conveyance due date or will be rejected. However, the mortgagee may request an
extension of the conveyance due date. For a one time major repair item, the mortgagee must enter
the request and its supporting documentation into the P260 internet based web portal for review
and approval or denial by the Mortgage Compliance Manager. The cost of the one time major
repair item does not count toward the maximum allowable cost of $2,500 per property for
property and preservation expenses.
HUD is not prescribing the amounts that mortgagees may pay for the services performed, but is
standardizing a reasonable maximum allowance that HUD reimburses for such services.
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.
3.

Conveyance of Properties

Mortgagees may convey damaged properties without prior written approval if there is damage
resulting from Mortgagor neglect and the damage was discovered and documented at the initial
inspection. The mortgagee must include a description of the damage in the “Mortgagee‟s
Comments” section of Form HUD-27011, Part A, and mark Item 24. “Is the property conveyed
damaged?” “no”. (Note: marking “yes” in item 24, triggers HUD‟s claim system to look in item 26
for the date of HUD‟s approval to convey the property damaged and to item 27 for the amount that
the claim is to be reduced.)
For properties that were damaged while under the control of the mortgagee or as a result of
mortgagee neglect, the mortgagee must obtain approval from the MCM to convey the damaged
property to HUD. However, as a matter of administrative practice, HUD generally will not deny
conveyance of properties if the Government‟s estimate of the cost to repair the damage attributable
to the mortgagee is equal to or less than $2,500. The claim is generally reduced by that amount.

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The mortgagee must include documentation supporting the P&P work performed on the property.
At a minimum, this documentation shall include evidence of the date of vacancy, validation of the
property condition at vacancy, inspection reports, and a chronology of actions performed by the
mortgagee to preserve and protect the property. If no documentation or inadequate documentation
is received from the mortgagee, all the damage will be considered attributable to the mortgagee and
HUD may either re-convey the property to the mortgagee or seek reimbursement from the
mortgagee for HUD‟s estimate of the cost of the repairs.
4.

Local Requirements

If at any time local codes require more extensive protection than stated in this guidance, mortgagees
shall contact the MCM.
5.

Photographs

P&P actions must be documented to include before and after pictures using digital photography.
The photographic fee is included in the lock change/securing maximum allowable cost per property.
Photographs are required to document property condition and all P&P claimed expenses. All
photographs shall be dated and labeled. If photographs are not included at the time of the claim
review, the expenses will be disallowed.
6.
A.

Specific Preservation Requirements
Inspections:

For specific details about HUD Inspection Requirements see 24 CFR § 203.377 and HUD
Handbook 4330.1, Rev- 5, Chapter 9-9, as it provides complete details on inspection requirements
and types of inspections.
There are three types of inspections:
Occupancy Inspections;
Initial Vacant Property Inspections; and
Vacant Property Inspections.
Inspection reports and photographs shall be submitted in P260 in support of the 27011 parts B - D
claim request.
Occupancy Inspection (Inspection at Initial Default)
When a mortgage is in default because a payment was not received within 45 calendar days of the
due date of the missed payment, and efforts to reach the mortgagor by telephone or correspondence
have proven unsuccessful, the mortgagee must make an inspection to determine if the property is
vacant or abandoned.

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Initial Vacant Property Inspection
An Initial Vacant Property Inspection is performed on the date the mortgagee takes physical
possession of a vacant or abandoned property. The initial inspection is when the mortgagee
ascertains the condition of the property, and may be of critical importance in distinguishing between
mortgagor and mortgagee neglect following conveyance. If the occupancy inspection and initial
vacant property inspection are performed on the same date, only one inspection fee will be
reimbursed.
Vacant Property Inspections (On-Going Delinquency Inspection)
Vacant Property Inspections are performed after the initial inspection and physical possession by the
mortgagee have occurred. The mortgagee shall inspect a vacant or abandoned property every 25-35
days following an initial inspection, or more frequently, as authorized by HUD.
Generally, not more than 13 inspections per calendar year may be claimed. Where there is a
property in an area requiring more frequent inspections due to high vandalism or local ordinances,
police reports and/or a letter from a local law enforcement agency requesting additional protective
measures may be submitted to support the additional inspection(s).
B.

Securing:

Properties must be secured to prevent unauthorized entry and protect against weather-related
damage. All exterior doors shall be secured. The mortgagee is also responsible for the following
securing activities:
Replacing a broken window-pane (re-glazing), unless the opening is to be boarded;
Securing in-ground swimming pools;
Securing above-ground pools;
Securing hot-tubs and spas; and
Maintaining pools, hot tubs and spas.
Minimum Securing Requirements
1. All windows and doors must be secured.
2. Broken glass shall be removed from interior and exterior areas and replaced, unless the opening
is to be boarded.
3. Locks on the front and rear entry doors shall be rekeyed to random identical key codes.
4. If there is a deadbolt lock on the main entry door replace the handle set. Key the deadbolt the
same as the handle set.
5. Other entryways that provide immediate access to a living area, attached garage or basement
shall be secured with a knob-lock, keyed the same as the front and rear entry doors. Or, if the
secondary entryway has an existing deadbolt lock, re-key the deadbolt to the specifications of
the front and rear entry doors.
6. Document key-codes to the existing or replacement lock in the Mortgagee‟s Comments section
of form HUD-27011 Part A, which must be provided to the MCM.
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7. Doors and windows must not be braced or nailed shut or the mortgagee will be held accountable
for resulting damage. Replace locking mechanism on windows or doors, if inoperable or
missing.
8. Sliding glass doors should be double locked.
9. Detached or attached garage doors and outbuildings shall be secured with a padlock and hasp if
no other locking mechanism exists.
10. Unplug automatic garage door openers, when applicable. Garage doors should be left in such a
condition as to allow for opening and closing without the use of the automatic garage door
opener. Leave the remote key(s)/transmitter(s) in a kitchen counter drawer.
11. Display 24-hour emergency contact information including a toll free telephone number in a
front window. This contact information shall clearly advise any person of interest, or someone
who wants access to the property whom to contact.
C.

Roof Repair:

The mortgagee is responsible for roof repairs (e.g., patching or replacing loose shingles). The
maximum allowance for roof repairs is $600. Please refer to Exhibit A, Item I, “Maximum Property
Preservation Allowance and Over-Allowable Expense Request” when the cost of roof repair
exceeds $600.
D.

Pools, Hot Tubs and Spas:

In-ground pools (including hot tubs or spas that share the same filtering system as the pool) must be
secured but not drained. Pools (including hot tubs or spas that share the same filtering system),
must be secured with a cover that prevents entry, either deliberate or accidental. Fences must be
secured to restrict access, if applicable.
Above Ground Pools: If the above ground pool is in good condition (i.e., built-up with decking or
other infrastructure that provides value and will support a pool cover), secure it with a cover that
prevents entry, either deliberate or accidental. Above ground pools in poor condition or those that
cannot be secured shall be removed. When an above ground pool is removed, remediate any
depression in the ground that might constitute a hazard.
Securing Hot Tubs or Spas: The Mortgagee shall drain and secure portable hot tubs and spas. If a
hot tub or spa is outdoors, the mortgagee shall secure it with a cover that prevents entry, either
deliberate or accidental.
Maintenance of Pools, Hot Tubs or Spas: The Mortgagee must perform monthly maintenance and
chemical treatments to operational pools, hot tubs or spas when attached to a pool filtering system.
E.

Boarding:

Reimbursement for boarding is provided on a “per opening” basis, up to the maximum allowance
per property. The Mortgagee shall be reimbursed for boarding when the following conditions are
met:
The property has been secured for safety reasons; and
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The property is in a high vandalism area and boarding is the only reasonable means
to protect the property.
The following specifications shall be followed:
Windows: Secured with ½” plywood or equivalent
Doors: Secured with 5/8” plywood or equivalent
Other Openings: French doors and sliding door openings should be secured with ¾”
plywood or equivalent.
All openings shall be boarded. If security bars are located on windows/doors, boarding is not
required. Small openings, such as pet openings in doors, should be secured but not boarded.
Eliminate any health and safety hazard caused by any protruding bolts used to secure boarding
and/or any broken glass.
If local codes differ from HUD requirements above, contact the MCM for direction.
F.

Yard Maintenance and Snow Removal:

Grass cuts (initial and subsequent cuts) include mowing, weeding, edge trimming, sweeping of all
paved areas, and removal of all lawn clippings, related cuttings, and incidental debris (newspapers,
flyers, bottles, etc.) removal. The disposal of all clippings and incidental debris should comply
with jurisdictional requirements.
Mortgagees should not order yard maintenance if a homeowners‟ association for such property
covers this service.
Frequency of Grass Cuts:
An initial grass cut is permitted at the beginning of each grass-growing season. Initial grass cuts
may be completed when needed, during any month of the year, in the following states/territories:
Alabama, Arizona, California, Florida, Georgia, Guam, Hawaii, Louisiana, Mississippi, Nevada,
New Mexico, Puerto Rico, South Carolina, Virgin Islands and Texas.
Initial grass cuts are allowed from June 1 to September 30 in the state of Alaska. In all other states,
initial grass cuts are allowed between April 1 and October 31. If conveyance occurs during the
growing season, a final grass cut should be completed within two weeks of conveyance. After the
initial cut, grass should typically be re-cut twice a month during the periods listed above. Shrubs are
to be trimmed and cuttings removed once in a growing season, between April 1 and October 31.
Grass should be cut to a maximum of two inches in length. Grass and weeds are to be cut to the
edge of the property line, trimmed around foundations, bushes, trees, and planting beds. Grass and
weeds should also be trimmed flush with fences and other construction that would normally require
trimming.

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Snow Removal:
The mortgagee shall maintain a safe and accessible property throughout the winter season. Snow
shall be removed from the entire entryway, walkways, porch and driveway following a minimum
three-inch (3”) accumulation. Mortgagees must comply with local codes and ordinances governing
the removal of snow and ice.
G.

Winterization Requirements:

Properties are to be winterized between October 1 and March 31, unless, climatic conditions require
earlier and extended winterization treatment periods. Properties should only be winterized once.
However, a property should be re-winterized if the initial winterization is no longer effective. The
winterization process must include cleaning toilets and a complete draining of all plumbing and
heating systems. The mortgagee is responsible for any damage to plumbing and heating systems,
including sump pumps and wells, caused by untimely, inadequate, or improper maintenance or
winterization.
Utilities:
Utilities are to be turned off unless required to protect the property, such as in states where heat is to
remain on. For units that are attached to other units or dwellings, water services and utilities should
remain on only if those systems are shared with other units. In some cases, it may be cost-effective
to maintain utility service rather than disconnect the service. For example, in some rural areas, large
fees may be charged to re-connect water service. Mortgagees should use proper judgment to
determine the most cost-effective method of managing utilities when re-connection fees exist.
Condominiums and Attached Dwellings
At condominiums and attached dwellings in Planned Unit Developments (PUDs), water services
and utilities should remain on if the systems are shared with other units.
Sump Pumps
Where there is an existing sump pump, the mortgagee shall check to make sure the sump pump is
operating. The mortgagee shall leave the electricity on, regardless of whether the property is
located in a state where utilities are required to be off.
Utility Accounts
Utility accounts including electricity, gas, home heating oil and water, should be in the mortgagee's
name until conveyance of the property to HUD.
In states where utilities should remain on, if there is any reason to believe that a mortgagor may
abandon a property, the mortgagee shall contact the utility company to request that the mortgagee
be notified of non-payment of utilities so that utilities can be transferred to the mortgagee‟s name
and the heat remain on if the mortgagor vacates.
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Propane and Oil Systems
If the property has a propane or oil heating system, put a "KEEP FULL" work order on with a local
supplier in those jurisdictions, where the heat should remain “ON.”
Water:
Domestic Water
If the water supply source is a public system, the utility company shall be contacted to turn off the
water supply at the curb. The mortgagee shall not cut water lines or remove water meters. The
water department or provider shall be notified when water is turned off so that a final meter reading
is completed.
Wells
If the water supply is a private well, the mortgagee shall turn off the well at the breaker panel and
tape off the breaker, disconnect the water supply line between the property and pressure tank and
install a hose bib on the pressure tank side of the breaker. The hose bib shall be tagged “For Water
Testing". All pressure tanks shall be drained. If pump is surface mounted, drain pump housing. If
submersible, then disconnect the check valve and drain all pump, suction, and discharge pipes. All
fixtures shall be winterized.
H.

Demolition:

The cost of demolition is not included in the maximum cost limit per property. In such cases, where
a local jurisdiction has determined a property to be uninhabitable and mandates demolition of a
property, the mortgagee must obtain approval from the MCM. Requests received less than five (5)
business days of the conveyance timeframe where no extension has been requested and approved,
will be rejected, unless notification by the local jurisdiction has not been received within that period.
The mortgagee must provide to the MCM documentation to include the notice of demolition by the
local jurisdiction along with inspection reports and photographic documentation that establishes the
condition of the property when the mortgagee first entered or took possession of the property.
7.

Claim Submission and Documentation

HUD will reimburse mortgagees for P&P actions in accordance with the provisions of this
Mortgagee Letter, upon receipt of Form HUD-27011 Parts A & B. For instructions on claim
processing and document submission, see HUD Handbook 4330.4, REV-1, “FHA Single Family
Insurance Claims” (http://www.hud.gov/offices/adm/hudclips/handbooks/hsgh/4330.4/index.cfm).
Documentation including photographs to support each P &P claimed expense shall be provided to
the MCM through the web-based P260 portal, upon submission of the claim for insurance benefits
request. The documentation must support the expenditures and provide a verifiable timeline that
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demonstrates the mortgagee took prudent actions to preserve and protect the property until its
conveyance. The MCM will audit all claims filed under HUD Form 27011 parts B-D to evaluate
the charges against Exhibit B of this Mortgagee Letter and ensure that the Department was not
overcharged. The MCM will evaluate the cost of the preservation and protection work performed
using an industry standard cost estimator.
HUD will require the repayment of reimbursements if it determines that:
Amounts paid for reimbursement were unnecessary or excessive; or
Services claimed were not performed or not performed properly
To claim reimbursement, all P&P actions shall meet the guidelines as provided in 24
CFR § 203.377 through 24 CFR § 203.381, the guidance provided in this Mortgagee
Letter and any subsequent guidance as directed by HUD.
Mortgagees are prohibited from performing or claiming P&P services after the deed has
been recorded. However, payment of certain utility bills may be considered an
exception to this guideline. Reimbursable costs are outlined on the attached Exhibit B,
“Maximum Property Preservation Allowance” chart.
8.

Requests to Exceed Timeframes

The mortgagee shall submit a separate request for each extension of time to the MCM. All requests
for extensions shall be submitted on form HUD-50012, Mortgagee’s Request for an Extension of
Time (now PDF fill-able) through HUD‟s web-based P260 portal. Upon receipt, the MCM will
have five (5) business days to approve the request, reject the request as lacking adequate
documentation or deny the request.
If the MCM rejects or denies the request for an extension of time, the MCM will specify, in writing,
the reason for the rejection or denial on form HUD-50012 and post this information in HUD‟s P260
portal. Verbal requests for extensions will not be accepted. Requests received less than five (5)
business days of the conveyance timeframe will be rejected. For guidance on extension of time
requirements, see HUD Handbook 4330.4, “FHA Single Family Insurance Claims,” Section 1-6,
Extension of Time Requirements.
9.

Appeal of a Demand for Reimbursement

If a mortgagee has improperly conveyed a property or billed HUD for P&P services that were either
not performed or were not performed properly, or in cases of mortgagee neglect, HUD will
authorize its MCM to issue a Demand Letter in accordance with 24 CFR § 203.363.
If a mortgagee believes that the demand decision is not supported by regulation or circumstance,
the mortgagee may request a review of the indebtedness determination or inspect departmental
records related to the debt by submitting a request to the MCM through HUD‟s P260 portal within
20 days of receipt of the Secretary‟s notification (24 CFR § 17.104-105).

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10.

Record Retention

Mortgagees are reminded that pursuant to HUD Handbook 4330.4, paragraph 1-12, all claim
files must be maintained for a period of three years after the date of the last check received by
the mortgagee in payment of a claim. The submission of documents to P260 does not abrogate
this requirement.
11.

Enforcement

As a cautionary note, the Department reminds mortgagees that in addition to the surcharges
discussed in this Mortgagee Letter, HUD may pursue enforcement action, including debarment,
civil money penalties and actions under the Program Fraud Civil Remedies Act.

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EXHIBIT B:

Maximum Property Preservation Allowances

DESCRIPTION OF SERVICE
Property Inspections
Property Inspections
Subsequent inspection (as reqd.)
Permit & Vacant property registration
Securing

MAXIMUM ALLOWANCE
$30 per unit; $15 additional unit
$20 per unit; $15 additional unit
$250
$60 per lock-set & $40 per pad lock;

Initial securing of property
Re-glazing window (replacing a window pane)
Re-securing/re-keying of property
Roof repair
Securing in-ground swimming pools
Securing above-ground swimming pools
Securing hot-tubs & spas
Maintenance of pools, spas & hot tubs
Boarding
Windows with 1/2" plywood or equivalent
Doors with 5/8" plywood or equivalent
Other openings with 3/4" plywood or equivalent
Debris/Trash Removal/Dumping fees
Amount per cubic yard of trash
Maximum allowable for 1 unit
Maximum allowable for 2 units
Maximum allowable for 3 units
Maximum allowable for 4 units
Vehicle removal
Yard Maintenance
Initial cut up to 5,000 sf.
Initial cut 5,001 - 10,000 sf.
Initial cut 10,000 -15,000 sf.
Re-cut up to 5,000 sf.
Re-cut 5,001 - 10,000 sf.
Re-cut 10,000 - 15,000 sf.
Shrub Trimming
Hazard abatement
Snow/ice removal
Sump Pump repair
Sump Pump installation
Water Heater/Well/ Septic/ HVAC repair
Pumping water from basement
Demolition (excluded from the max allowable per
property)
Winterization
Dry Heat - 1 unit
Dry Heat - additional unit

$30
$0
$600 (FHA does not tarp )
$1,050
$400
$50
$100 monthly
$80 per window; $550 max for all windows
$150 per opening; $300
$125 per opening maximum
$50
$600 (Minimum load of 12 cu. yds of waste)
$750 (Minimum load of 15 cu yds of waste)
$900 (Minimum load of 18 cu yds of waste)
$1,050 (Minimum load of 21 cu yds of waste)
$210 per vehicle
$50
$75
$100
$40
$65
$85
$30 per site
$50
$50
$300
$300
$1,000
Up to $10,000 (single story)
Up to $12,500 (multi-story)
$100
$50

MAXIMUM PROPERTY PRESERVATION ALLOWANCES

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DESCRIPTION OF SERVICE

MAXIMUM ALLOWANCE
$150

Wet (steam) Heat - 1 unit
Wet (steam) Heat – additional unit
Wet (radiant) Heat - 1 unit
Wet (radiant) Heat - additional unit
Reduced Pressure Zone (RPZ) valves
Pools, Spas, and Hot-tubs
Utilities
Electricity, Gas, Oil, Propane, Water & Sewer
Maximum Allowance Per Property

$90
$250
$125
$150 (if State or locally req‟d.)
$200 (if State or locally req‟d.)
$75 (For one-time shut off/transfer fee.)
$2,500

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