What Property Preservation is About

Property preservation involves the securing, protecting, and preparing of properties for sale that have undergone foreclosure, default, or are in bank-owned status. The financial hardships that cause these unfortunate situations leave prior homeowners unhappy about losing their homes. As a result, many of these homes are left in poor and sometimes unmarketable conditions.

The rise of REO (real estate owned) properties have created an influx of vacant and/or abandoned homes. As they arise, so do companies that provide property preservation services.

Many lenders are finding it easier and more cost-efficient to use established property preservation companies. Lenders and mortgage companies have even created separate departments that handle properties that require property preservation services.

Some well established companies have developed computer programming systems that allow lenders, contractors, and other parties to manage work orders or jobs created for each vacant and/or abandoned property. In addition, many large property preservation companies use contractors nationwide. Therefore, being up in compliance with the guidelines and regulations for each state is very important.

The U.S. Department of Housing and Urban Development (HUD) have set guidelines and regulations that help protect lenders and mortgage holders from further damages or costs that may be associated with these properties. In April 30, 2007, a mortgagee letter was written to set regulations and guidelines for costs, safety issues, and other important factors that may be necessary to perform in order to make it saleable and free from unfavorable conditions that may raise legal or undesirable circumstances to occur. This mortgagee letter was updated in May 12, 2008 and can be found in the following link http://www.hud.gov/utilities/intercept.cfm?/offices/hsg/sfh/nsc/ml0703qa.pdf.

The following are some of the services provided by property preservation companies:

- Securing of property

Locks (door knobs and/or deadbolts) are changed according to lender requirements or by abiding by applicable regulations.

Padlocks, slide bolts and/or hasps may be installed to accompany lock change if required for complete property security.

Lock boxes are typically installed with an assigned code unless already provided by realtor. Lock boxes secure keys to the property to allow third party access

Board-ups are completed to secure windows, doors, and entry ways that allow easy access into the property. Applicable guidelines for security are followed based on the size of entry way.

Swimming pool areas - swimming pool areas are secured according to appropriate guideline requirements.

- Debris Removal

Personal property - items that are considered personal properties (ex. televisions, computers, items in good condition, etc) are typically stored in a storage for a period of 30 - 90 days depending on lender requirements. Personal items that are not claimed within this period are either sold at a sheriff's sale/auction, auctioned, or dispensed.

Debris - debris are removed based on lender/insurer/client instructions. Debris are removed and counted based on cubic yards. Lenders typically charge based on this count.

Hazard material(s) - hazard materials are removed based on lender/insurer/client instructions. The dumping of hazard material MUST be followed according to city/county codes. Illegal dumping of hazardous waste is a crime and may be very costly to the individual performing this act.

Car removal - car(s) are removed based on lender/investor/insurer/client instructions.

*Many lenders/investors/insurers/clients require that a dump receipt be provide to verify that the debris was dumped legally.

- Winterization

What is winterization - Winterization involves the preparation for an upcoming winter. This process involves the draining and sealing of pipes so that water does not freeze inside the pipes. If not performed correctly, pipes may burst or break.

How is a property winterized -

1) Gas and/or electricity should be turned off for the boiler and the water heater.

2) All plumbing and heating systems must be drained.

3) Air pressure must be used to clear the system of water.

4) Anti-freeze must be added to all fixtures.

5) Water supply must be shut off by closing the main shut off valve.

6) Water meter must be disconnected from the cradle and left on the premises.

7) The feed pipe that leads to the main water valve must be disconnected, plugged, or capped.

8) All winterized items must be tagged or labeled with date of winterization and preferably the company that performs the winterization.

- Lawn Maintenance

Initial and reoccurring lawn services will be provided based on requirements set by city/county/lender/investor/insurer/client. Services may be required one to two times per month.

- Janitorial/Sales clean

Many homes that are left uncared for may need additional work done during janitorial/sales clean. All bedrooms and bathrooms must be cleaned according to sanitary standards and as required by lender/investor/insurer/client. All rooms must be free from debris and other items that are not permanently fixed to or a part of the sale of the property. Services usually include vacuuming, mopping, and scrubbing of items needed to be cleaned.

- Pool Maintenance

Client awareness of pool condition must be made immediately. Then upon instruction and based on the pool's condition, it must be drained, cleaned, and refilled as necessary. Chemical are added on a weekly basis along with other services that are necessary to maintain pool's cleanliness.

- Snow Removal

Snow is typically removed based on the requirements set by lender/investor/insurer/client.

- Photographs

Photographs of all services must be provided to lenders/investors/insurers/clients. Many clients require before photos to be submitted prior to issuance of assignment. However, other lenders/investors/insurers/clients require all before and after service photos to be provide upon completion of assignment. Photos must indicate of the amount of service provided by field service (property preservation) company.

These are just some of the typical services that are provide. As mentioned, there may be others based on requirements set by HUD and the lender/investor/insurer.