Property Preservation & REO Maintenance
HUD GuideLINES
HUD handles property preservation for properties that have been foreclosed on and will soon be foreclosed on – they also handle the property inspections, renovation permit, and access restrictions that they will pass on to you if you work with them. Always keep in mind while you are performing your work that part of your job is to make the properties look attractive to prospective buyers once the bank or management company is ready to resell them. Some people call this “curb-appeal,” and it’s a basic tenet of this business.
HUD guidelines include property “accessories,” meaning swimming pools and spas and outbuildings like garages and sheds that may be on the property. There is also a registration fee that property preservation companies must pay on each property they want to care for – this fee may be reimbursed if the company owner completes the proper forms and submits them to HUD. Next, you need to meet at the property with your contractors (if you have them) and determine which repairs are necessary, and that the property can sit without much maintenance for a long period of time. Preparation for inclement weather is a large part of this step. Some inclement weather that may occur during the property foreclosure and resale process includes:
- Blizzards
- Hurricanes
- Thunderstorms
- High wind
What is Property Preservation?
Property preservation is the process of caring for the inside and outside of a foreclosed property, be it vacant or occupied. Property preservation businesses work with banks and asset management companies to provide services such as repair, inspection, insurance claim management, and maintenance. Property preservation is also called “mortgage field services,” and getting involved with completing REO rehabs and property preservation repairs directly for national servicing companies will help your business succeed. Another great option is to work as a subcontractor for a company who also works with national servicing companies. In order to do this, you should become a Property Preservation Repair Vendor or an REO (real estate owned) Repair Vendor. Some of the major U.S. government agencies you may end up working with include: Department of Housing and Urban Development (HUD) Federal Housing Administration (FHA) Veterans Administration (VA) NOTE Throughout the real estate industry literature/publications, you may find terms like: property preservation business, foreclosure cleanup, foreclosure clean-outs, foreclosure cleaning, mortgage field services, REO trash outs, field asset services, property field services and field services used interchangeably. The main thing to know is foreclosure cleaning and foreclosure cleanup generally refer to smaller entities while property preservation generally refers to larger entities
What is REO?
REO, as you may know, stands for “real estate owned,” and is a real estate and property preservation term that organizations in the United States use to describe a certain class of real estate, or property. REO properties are properties owned by a lending organization such as: A bank A government agency A government loan insurer These properties are usually bank-owned properties that have been seized by the banks or lenders from residents who were unable to pay their mortgages. The banks or lending agencies were counting on the interest on the loans for their own revenue, and so must salvage their investments when homeowners default their loans or can’t pay their mortgages. Their first move is to try and sell the properties at foreclosure auctions