oversight

BLM Companies LLC, Hurricane, UT, Did Not Provide Property Preservation and Protection Services in Accordance With Its Contract With HUD and Its Own Requirements

Published by the Department of Housing and Urban Development, Office of Inspector General on 2017-09-30.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                  BLM Companies LLC,
                     Hurricane, UT
     Single-Family Real Estate-Owned Management and
                   Marketing III Program
                   Field Service Area 4P




Office of Audit, Region 5     Audit Report Number: 2017-CH-1011
Chicago, IL                                   September 30, 2017
To:            Gisele G. Roget, Deputy Assistant Secretary for Single Family Housing, HU

               //signed//
From:          Kelly Anderson, Regional Inspector General for Audit, Chicago Region, 5AGA
Subject:       BLM Companies LLC, Hurricane, UT, Did Not Provide Property Preservation
               and Protection Services in Accordance With Its Contract With HUD and Its Own
               Requirements


Attached is the U.S. Department of Housing and Urban Development (HUD), Office of Inspector
General’s (OIG) final results of our review of BLM Companies LLC, field service manager,
HUD’s real estate-owned Management and Marketing III program.
HUD Handbook 2000.06, REV-4, sets specific timeframes for management decisions on
recommended corrective actions. For each recommendation without a management decision,
please respond and provide status reports in accordance with the HUD Handbook. Please furnish
us copies of any correspondence or directives issued because of the audit.
The Inspector General Act, Title 5 United States Code, section 8M, requires that OIG post its
publicly available reports on the OIG website. Accordingly, this report will be posted at
http://www.hudoig.gov.
If you have any questions or comments about this report, please do not hesitate to call me at
312-353-7832.
                   Audit Report Number: 2017-CH-1011
                   Date: September 30, 2017

                   BLM Companies LLC, Hurricane, UT, Did Not Provide Property
                   Preservation and Protection Services in Accordance With Its Contract With
                   HUD and Its Own Requirements

Highlights

What We Audited and Why
We audited BLM Companies LLC, a contracted field service manager in HUD’s real estate-
owned Management and Marketing III program, as part of the activities included in our 2017
annual audit plan and because it was the sole contractor performing property preservation and
protection services for U.S. Department of Housing and Urban Development (HUD)-acquired
properties located in Ohio. Our audit objective was to determine whether BLM provided
property preservation and protection services in accordance with its contract with HUD and its
own requirements.

What We Found
BLM did not provide property preservation and protection services in accordance with its
contract with HUD and its own requirements. Specifically, it did not ensure that it performed
adequate initial services before recently acquired HUD-owned properties were promoted to
ready-to-show status. BLM also did not ensure that HUD-owned and custodial properties were
maintained in accordance with its contract with HUD. As a result, HUD lacked assurance that
BLM maintained the properties in a manner that preserves communities and the value of the
properties. Further, BLM inappropriately received more than $25,000 in management fees for
properties that were not maintained in accordance with its contract. If BLM does not improve its
process for performing property preservation and protection services, HUD could inappropriately
pay $594,000 in monthly routine inspection fees for properties that are not maintained in
accordance with its contract requirements over the next year.

What We Recommend
We recommend that HUD require BLM to (1) certify and support that the applicable deficiencies
have been corrected for the 8 of 109 properties cited, (2) reimburse HUD more than $25,000 for
properties that did not receive proper preservation and protection services, and (3) implement
adequate procedures and controls to ensure that all properties comply with its contract with HUD
and its own requirements to prevent $594,000 in HUD funds from being spent over the next year
on management fees for properties that are not adequately maintained. Further, we recommend
that HUD assess BLM’s performance at least quarterly and if its performance does not improve,
HUD should determine whether BLM has defaulted on its contract and take the appropriate
actions.
Table of Contents
Background and Objective......................................................................................3

Results of Audit ........................................................................................................5
         Finding: BLM Did Not Provide Property Preservation and Protection Services in
         Accordance With Its Contract With HUD and Its Own Requirements ...................... 5

Scope and Methodology .........................................................................................22

Internal Controls ....................................................................................................24

Appendixes ..............................................................................................................25
         A. Schedule of Questioned Costs and Funds To Be Put to Better Use ...................... 25

         B. Auditee Comments and OIG’s Evaluation ............................................................. 26

         C. Criteria ....................................................................................................................... 98

         D. Schedule of OIG Routine Inspection Property Observation Results ................ 106

         E. Schedule of Initial Services Property Observation Results................................ 111




                                                                     2
Background and Objective
The Federal Housing Administration (FHA) is an organizational unit within the U.S. Department
of Housing and Urban Development (HUD) that administers the single-family mortgage
insurance program. FHA insures approved lenders against the risk of loss on mortgages. In the
event of a default on an FHA-insured loan, the lender acquires title to the property by
foreclosure, a deed in lieu of foreclosure,1 or other acquisition method; files a claim for insurance
benefits; and conveys the property to HUD. As a result of acquisitions through the mortgage
insurance program and other programs, HUD needs to manage and sell a sizable inventory of
single-family homes in a manner that promotes home ownership, preserves communities, and
maximizes the returns to the FHA insurance fund.

Since 1999, HUD has been outsourcing the disposition of its real estate-owned inventory to
management and marketing contractors. On September 24, 2015, HUD entered into a
management and marketing contract with BLM Companies LLC for field service management
services2 to successfully manage HUD-owned single-family properties and provide property
preservation and protection services consisting of but not limited to inspecting, securing,
performing cosmetic enhancements, repairing, and providing ongoing maintenance to the HUD-
owned properties.

BLM is a company that provides property preservation services including lawn maintenance,
debris removal, winterizations, securing, property verification, and repairs. It is the sole prime
contractor serving as the field service manager in seven contract areas covering 28 States,
including Ohio, for HUD’s management and marketing program. BLM was incorporated on
May 19, 2010, and its corporate office is located in Hurricane, UT. HUD’s Homeownership
Center in Philadelphia is responsible for the direct oversight of BLM’s contract for the State of
Ohio.

To implement its field service management contract with HUD, BLM uses subcontractors to
perform the property preservation and protection services. According to the contract with HUD,
BLM should maintain properties in ready-to-show condition and be liable for damages to all
acquired properties due to failure to inspect or maintain the property in ready-to-show condition
or secure the property or as a result of any other act, neglect, failure, or misconduct of the
contractor, a subcontractor, or any management official. The contractor must indemnify HUD
for losses due to any act, neglect, failure, or misconduct of the contractor, a subcontractor, or any
management official. Therefore, BLM is responsible for ensuring that the properties are
maintained in accordance with the contract with HUD and its own requirements.


1
  A deed in lieu of foreclosure is a transaction in which the homeowner voluntarily transfers title to the property to
the lender in exchange for a release from the mortgage obligation.
2
  Field service managers are companies that provide property maintenance and preservation services consisting of
but not limited to inspecting and securing properties, performing cosmetic enhancements or repairs, and providing
ongoing property maintenance.



                                                            3
Our audit objective was to determine whether BLM provided property preservation and
protection services for HUD-acquired single-family properties in accordance with its contract
with HUD and its own requirements.




                                                4
Results of Audit

Finding: BLM Did Not Provide Property Preservation and
Protection Services in Accordance With Its Contract With HUD and
Its Own Requirements
BLM did not provide property preservation and protection services in accordance with its
contract with HUD and its own requirements. Specifically, it did not ensure that it performed
adequate initial services3 before recently acquired HUD-owned properties were promoted to
ready-to-show4 status. BLM also did not ensure that HUD-owned and custodial properties were
maintained in accordance with its contract with HUD. These deficiencies occurred because
BLM lacked adequate oversight of its subcontractors to ensure that properties were maintained in
accordance with its contract and its own requirements. As a result, HUD lacked assurance that
BLM maintained the properties in a manner that preserved communities and the value of the
properties. Further, BLM inappropriately received more than $25,000 in management fees for
properties that were not maintained in accordance with its contract. If BLM does not improve its
process for performing property preservation and protection services, HUD could inappropriately
pay $594,000 in monthly routine inspection fees over the next year for properties that are not
maintained in accordance with contract requirements.

BLM Did Not Provide Adequate Property and Protection Services for HUD-Owned
Properties
BLM did not provide adequate initial services for 20 of the 27 properties reviewed and properly
maintain 89 of the 104 HUD-owned and custodial properties in its inventory in accordance with
HUD’s and its own requirements. The 109 (20 + 89) properties contained interior and exterior
health and safety hazards and other deficiencies, which resulted in the properties not being in
ready-to-show condition or failing to meet the standards in its contract. Appendix C contains the
relevant criteria and appendixes D and E identify the properties with deficiencies.

Initial Services Were Inadequately Performed
As part of its contract with HUD, BLM was required to perform initial services for recently
acquired properties to ensure that they were in ready-to-show condition, which included
mitigating health and safety deficiencies. We observed 27 properties that had been recently
serviced by BLM and promoted to ready-to-show status from February 21 through 23, 2017. Of
the 27 properties, 20 (74 percent) had 91 interior or exterior health and safety hazard
deficiencies, other deficiencies, or a combination of deficiencies that had not been resolved or



3
  The initial services include removing debris, cleaning, performing maid services, completing the initial yard
maintenance, mitigating health and safety concerns, and placing the property in ready-to-show condition.
4
  A property is in ready-to-show condition when the interior and exterior are clean, in good repair, and free of
hazards. The contract defines the term in more detail.



                                                           5
mitigated before the properties were determined to be in ready-to-show condition and listed for
sale. Specifically,

      19 properties had 45 interior health and safety hazards,
      12 properties had 16 exterior health and safety hazards,
      12 properties had 13 other interior deficiencies,
      13 properties had 17 other exterior deficiencies.

HUD paid BLM $19,280 to perform initial services for the 20 properties. We performed
followup observations for four of the 20 properties, and determined that those properties had the
same (recurring) deficiencies. Therefore, HUD also paid BLM $625 in routine inspection fees
for the properties that were not maintained in ready to show condition.

Properties Were Not Adequately Maintained
From BLM’s active property inventory as of December 7, 2016, we statistically selected 104
properties to observe. The properties had been assigned to BLM, based on its contract, for the
performance of routine preservation and protection services from February 3 through December
2, 2016. Of the 104 properties, 89 (86 percent) had 302 deficiencies consisting of interior or
exterior health and safety hazard deficiencies, other deficiencies, or a combination of
deficiencies. Specifically,

      68 properties had 136 interior health and safety hazards,
      34 properties had 39 exterior health and safety hazards,
      41 properties had 53 other interior deficiencies,
      54 properties had 74 other exterior deficiencies.

HUD paid BLM $5,900 in routine inspection fees for 89 properties.




                                                6
Eighty-Seven Properties Had One Hundred Eighty One Interior Health and Safety
Hazards
Contrary to sections C.2.2 and C.5.2.2.1.2.1 of its contract, the interiors of 87 of the 1315
properties were not free of health and safety hazards. The 87 properties had 181 interior health
and safety hazards. The following items are examples of interior health and safety hazards
observed: broken glass-sharp edges, broken-cracked windows, blocked egress, unmitigated
mold, exposed electrical, protruding nails and hooks, faulty-defective handrails, exposed rat
poison, deteriorating property, malfunctioning sump pump, uncapped plumbing, active water
intrusion, and activated gas.
Forty-Six Properties Had Fifty-Five Exterior Health and Safety Hazards
Contrary to sections C.5.2.2.1.2.1 and C.2.2 of its contract; the property management plan; the
initial services vendor checklist; HUD Handbook 4000.1, paragraph III.A.2.t.ii(C)(7)(a); and
BLM’s field service manager contractor presentation, 46 of the 131 properties observed had 55
exterior health and safety hazards. The following items are examples of exterior health and
safety hazards: sharp edges, exposed electrical, exposed nails or hooks, faulty handrails or stairs,
property not properly secured, and tripping hazards.
Fifty-Three Properties Had Sixty-Six Other Interior Deficiencies
Contrary to section C.2.2 of its contract and the property management plan, 53 of 131 properties
observed were not in ready-to-show condition. The 53 properties had 66 other interior
deficiencies. The following items are examples of other deficiencies observed: interior graffiti,
improperly dated sign-in sheet, interior debris, not in broom-swept condition, and nonwinterized
plumbing.
Sixty-Seven Properties Had Ninety-One Other Exterior Deficiencies
Contrary to sections C.5.2.10.2 and C.2.2 of its contract and the initial services checklist, 67 of
the 131 properties observed had other deficiencies. The 67 properties had 91 other exterior
deficiencies. The following items are examples of other deficiencies observed: damaged or
disconnected gutters, graffiti, landscaping that was not maintained, not in broom-swept
condition, unsecured property, and inaccessible outbuildings.

The table below presents the type of deficiency observed and the location, either interior or
exterior, for the 109 properties that had inadequate initial services or routine inspections.




5
 The 131 properties consisted the 27 properties we observed for initial services + the 104 properties we observed for
routine inspections.



                                                          7
                       Interior health   Exterior health   Other interior   Other exterior
  Deficiency type
                         and safety        and safety       deficiencies     deficiencies
Broken glass or
                            18                6                -                -
exposed sharp edges
Damaged roof or
gutter (including           -                 2                -                21
disconnected gutter)
Blocked egress              3                 -                -                 -
Environmental                                                                    -
                            14                -                -
hazard
Exposed electrical          53                5                -                 -
Falling or tripping                                                              -
                            53               13                -
hazard
Faulty handrail-                                                                 -
                            11                5                -
stairs
Vandalism                   -                 -                 3                6
Inaccurate or
missing sign-in
                            -                 -                3                -
sheet or incorrect
notice displayed
Interior debris             4                 -                13               -
Landscaping not                                                                 54
                            -                 -                -
maintained
Not broom swept or
                            -                 -                41                1
ready to show
Plumbing not
                            -                 -                 6               -
winterized
Property
                            1                 7                -                 -
deterioration
Property not
properly secured or         -                 16               -                9
inaccessible
Sump pump
malfunction-
uncapped                    24                -                -                 -
plumbing-water
intrusion, gas on
Swimming pool
uncovered or in             -                 1                -                -
poor condition
      Totals               181                55               66               91




                                              8
The following photographs illustrate examples of the deficiencies noted during observations of
the 109 properties that were not maintained in accordance with BLM’s contract with HUD or its
own requirements.


Property RI89:
exterior graffiti on back
of property




                                               9
Property RI95:
balusters with nails on
deck




Property RI93:
unsecured garage




                          10
Property RI48:
toilet not winterized




Property RI79:
unsecured removable
door to cellar




                        11
Property RI94:
deteriorated rear soffit




Property RI50:
flooded basement




                           12
Property RI104:
flooded basement.




Property RI86:
unmitigated mold in
basement




                      13
Property RI36:
standing water between
garage and kitchen




Property IS26:
flooded crawlspace




                         14
Property IS16:
hole in roof covered by
plastic bag – allowed
water intrusion




Property IS17:
malfunctioning
sump pump




                          15
Property IS6:
faulty handrail on front
porch




Property IS24:
exposed screw
and nail on rear deck




                           16
Property IS6:
unmitigated mold in
basement joists and
subfloor




Property IS19:
missing balusters in
upstairs bedroom




                       17
Property IS9:
broken-falling fence




We reviewed BLM’s inspection reports that had been completed after our property observations
and determined that the deficiencies noted had not been identified or addressed. Additionally,
we performed followup observations for 11 of the 109 properties to determine whether
previously identified deficiencies had been addressed and whether there were additional
deficiencies. The 11 properties were in BLM’s active inventory as of May 2017. Of the 11
properties observed, 10 had previously identified deficiencies that had not been fully resolved or
mitigated. Specifically, the 10 properties had a total of 40 deficiencies. Of the 40 deficiencies,
34 had not been mitigated, which included 26 health and safety deficiencies. According to its
contract with HUD, BLM was required to mitigate the identified health and safety deficiencies
within 2 calendar days of its inspection or notification of the deficiencies. Further, we found that
8 of the 11 properties had additional or new deficiencies that had not been identified.

BLM Lacked Adequate Oversight of Its Subcontractors
BLM lacked adequate oversight of its subcontractors to ensure that property preservation and
protection services were performed in accordance with its contract with HUD and its own
requirements. BLM subcontracted the performance of the initial services and routine inspections
to various vendors; however, it did not have an effective quality control process to oversee its
subcontractors. For instance, although BLM conducted quality control reviews of its
subcontractors, its reviews did not always identify deficiencies to ensure that the properties were
in ready-to-show condition. For instance, of the 27 properties observed after the initial services
had been completed by BLM’s subcontractors, 19 had undergone a quality control field




                                                 18
inspection by BLM’s staff before our observations. However, BLM’s quality control field
reviews did not identify the deficiencies noted during our observations at 13 of the 19 properties.

In addition, BLM was required to provide HUD with a monthly quality control review report,
summarizing its quality control review findings and the results of its quality control actions for
the previous month. According to BLM’s quality control plan, its goal was to review a minimum
of 10 percent of the total property inventory in steps 1C (ready-to-show condition) through 7
(preliminary offer) every month. However, BLM did not maintain documentation to support that
it had performed the required monthly reviews. Further, according to BLM’s records, at least
three subcontractors had performed quality control services on properties for which they had
completed the initial services.

In addition, BLM required its subcontractors to take a minimum of 75 date-stamped photographs
of the properties (35 exterior and 40 interior) as evidence of the routine inspections and the
completion of work items. However, contrary to this requirement, BLM’s contractors did not
take or document in HUD’s P2606 system the required number of photographs. During the audit,
BLM explained that the requirement of 75 photographs was essentially a goal for the
subcontractors to meet. However, since BLM subcontracted out the property preservation and
protection services for HUD-owned properties and did not perform onsite reviews for all
properties in its inventory, it relies on the photographs and other supporting information
submitted by its subcontractors to ensure that it complies with its contract with HUD.  In
addition, BLM had software that allowed it to identify the location where each photograph was
taken. However, not all of its subcontractors used the software for inspections. This software
would enable BLM to be certain the contractor was at the property on the date and time of the
inspection. Further, BLM required its vendors to ensure the camera or phone has the correct date
and time stamp before taking photographs; however, the date of the inspection and the date on
the related photographs did not always match.

BLM used a spreadsheet and a log to track the desktop reviews of its subcontractors’ initial
services and routine inspections. However, when we reviewed the documents, we identified
properties that were no longer in its inventory at the time of the desk review. The time between
the date of the reported review and the date the properties were removed from BLM’s inventory
ranged from 4 to 167 days. Properties were being identified as reviewed after the properties
were no longer in inventory, so no recent inspection documents were reviewed.

In November 2016, HUD issued BLM a letter expressing its concern regarding BLM’s
performance of quality control reviews of its subcontractors. HUD stated that the initial services,
including the performance of quality control reviews of its subcontractors’ work to ensure that
the work had been completed and that the properties were in ready-to-show condition, was
required to be completed before BLM determined that the properties were in ready-to-show
condition. The properties had been promoted to step 1C (ready to show) in HUD’s P260 system


6
 P260 is an internet-based system that serves as the primary system of record for all HUD real estate-owned case
management transactions. The system will assign each HUD-owned property for contractors to track the disposition
activity from conveyance to sale.



                                                       19
by HUD’s asset manager based on BLM’s assertions that initial services had been completed.
The promoted properties were not in ready-to-show condition. BLM was informed of its lack of
oversight of its quality control program at the early stage of our audit for issues that were
identified prior to the commencement of the audit.

Conclusion
BLM lacked adequate oversight of its subcontractors to ensure that properties were maintained in
accordance with its contract with HUD and its own requirements. As a result, HUD lacked
assurance that BLM maintained the properties in a manner that preserved communities and the
value of the properties. Further, BLM inappropriately received more than $25,000 management
fees for properties that were not maintained in accordance with its contract. If BLM does not
improve its process for performing property preservation and protection services, HUD could
inappropriately pay $594,000 in monthly routine inspection fees over the next year for properties
that are not maintained in accordance with its contract requirements.
Recommendations
We recommend that HUD’s Deputy Assistant Secretary for Single Family Housing require BLM
to

        1A.      Certify and provide supporting documentation showing that the identified
                 deficiencies have been corrected for the 8 of 1097 properties cited in this audit
                 report.

        1B.      Reimburse HUD $19,280 in ineligible management fees for 20 properties for
                 which initial services were improperly performed before promotion to ready-to-
                 show status.

        1C.      Reimburse HUD $6,525 in ineligible routine inspection fees for 93 properties8
                 that contained property preservation and protection deficiencies.

        1D.      Improve its quality control procedures to accurately track and conduct reviews in
                 a manner that ensures all properties in its active inventory comply with HUD’s
                 and its own requirements to prevent $594,000 in monthly routine inspection fees
                 from being spent over the next year for properties that are not adequately
                 maintained. The quality control procedures should include but not limited to
                 continued training of BLM’s staff and subcontractors on properly identifying and
                 addressing property deficiencies; maintaining sufficient documentation of its


7
  Of the 109 (89 routine inspections + 20 initial services), 94 properties were sold + 2 were reconveyed back to
lenders + 4 were removed from BLM inventory. Thus, there were 8 properties still in BLM active inventory as of
August 3, 2017.
8
  The 93 properties consist of the 89 of 104 properties observed that had property preservation and protection
deficiencies + the 4 of 27 properties observed regarding initial services for which we noted recurring deficiencies
during our followup observations in May 2017. The $6,525 is the sum of the ineligible routine inspection fees HUD
paid BLM for the 89 properties ($5,900) and the four properties that underwent initial services during February 21
through 23, 2017 and had routine inspections in the subsequent months through May 2017 ($625).



                                                         20
                     monthly quality control reviews and corrective actions; verifying that the date-
                     stamped photographs were for the corresponding inspection dates; and regularly
                     updating its tracking mechanism for desktop reviews of inspections to ensure that
                     it conducts desktop reviews for properties that are still in its inventory.

We recommend that HUD’s Deputy Assistant Secretary for Single Family Housing

           1E.       Assess BLM’s performance under the area 4P9 contract at least quarterly to
                     determine whether it has improved its performance. If its performance does not
                     improve, HUD in coordination with the Office of the Chief Procurement Officer
                     should determine whether BLM has defaulted on its contract and take the
                     appropriate actions.




9
    The 4P contract covers the State of Ohio in its entirety.



                                                                21
Scope and Methodology
We performed our audit work from November 2016 through May 2017 at the Chicago regional
office and Columbus field office, and we performed property observations in Ohio. The audit
covered the period September 25, 2015, through May 30, 2017.

To accomplish our objective, we interviewed HUD’s staff at the Philadelphia Homeownership
Center and BLM’s employees. In addition, we reviewed the following:

        BLM’s contract with HUD, internal policies and procedures, property management plan,
         quality control plan, work order descriptions, quality control reports, and quality control
         review logs and scorecard reports10.

        Information in HUD’s P260 system, including the active properties assigned to BLM’s
         inventory, routine inspection reports and photographs, HUD property inspection reports,
         and initial services’ photographs.

From the 1,278 active properties in BLM’s 4P contract area (Ohio) inventory as of December 7,
2016, we statistically selected a stratified, two-stage cluster sample of 104 properties to observe.
We used a statistical sample so the audit results could be projected to the universe. Of the 104
selected properties, we found that 89 properties were not maintained in accordance with BLM’s
contract with HUD or its own requirements. Projecting these results to the universe and
deducting a statistical margin of error, we can say, with a one-side confidence interval of 95
percent, that this amounts to at least 990 properties that were not maintained in accordance with
BLM’s contract with HUD or its own requirements. Similarly, we found that of the fees paid, an
average of $38.75 per property was spent on properties that were not maintained in accordance
with BLM’s contract with HUD or its own requirements. Projecting this amount to the audit
universe of 1,278 properties and deducting for a statistical margin of error, we can state, with a
one-sided confidence interval of 95 percent that at least $49,500 in ongoing monthly routine
inspection fees was paid for properties that were not maintained in accordance with BLM’s
contract or its own requirements for 1 month. Over the next year, this is equivalent to an
overpayment of $594,000 ($49,500 x 12 months) in property routine inspection fees paid for
properties that are not maintained in accordance with BLM’s contract or its own requirements.

Calculations below:

(85.2% - 1.833 X 4.2%) x N = 77.5% x N ≈ 990 properties not adequately maintained
(42.6 - 1.833 X 2.1) x N = 38.75 x N ≈ $49,500 spent monthly for properties not adequately
maintained


10
  Scorecard reports are issued by HUD quarterly to assess the contractor’s adherence to the standards detailed in the
contract’s performance requirements summary.



                                                          22
Further, we selected a representative nonstatistical sample of 27 properties that were promoted to
ready-to-show condition in HUD’s P260 system from February 21 through 23, 2017, to observe
and determine whether BLM properly performed initial services for the HUD-acquired single-
family properties before the properties were promoted to ready-to-show status. The results of the
sample property observation were limited to the population reviewed and cannot be projected to
the universe.

We relied in part on data maintained by BLM and its vendors or subcontractors in its work order
and property management system and data entered into HUD’s P260 system by BLM and its
vendors or subcontractors. Although we did not perform a detailed assessment of the reliability
of the data, we performed a minimal level of testing and found the data to be adequately reliable
for our purposes.

We provided our review results and supporting schedules to HUD’s Acting Deputy Assistant
Secretary for Single Family Housing; branch chief and government technical representative of
the Philadelphia Homeownership Center, Real Estate Owned Division; and BLM’s president.

We conducted the audit in accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain sufficient, appropriate
evidence to provide a reasonable basis for our findings and conclusions based on our audit
objective(s). We believe that the evidence obtained provides a reasonable basis for our findings
and conclusions based on our audit objective.




                                                23
Internal Controls
Internal control is a process adopted by those charged with governance and management,
designed to provide reasonable assurance about the achievement of the organization’s mission,
goals, and objectives with regard to

   effectiveness and efficiency of operations,
   reliability of financial reporting, and
   compliance with applicable laws and regulations.
Internal controls comprise the plans, policies, methods, and procedures used to meet the
organization’s mission, goals, and objectives. Internal controls include the processes and
procedures for planning, organizing, directing, and controlling program operations as well as the
systems for measuring, reporting, and monitoring program performance.
Relevant Internal Controls
We determined that the following internal controls were relevant to our audit objective:

   Effectiveness and efficiency of operations – Policies and procedures that management has
    implemented to reasonably ensure that a program meets its objectives.
   Compliance with applicable laws and regulations – Policies and procedures that management
    has implemented to reasonably ensure that resource use is consistent with laws and
    regulations.
We assessed the relevant controls identified above.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, the
reasonable opportunity to prevent, detect, or correct (1) impairments to effectiveness or
efficiency of operations, (2) misstatements in financial or performance information, or (3)
violations of laws and regulations on a timely basis.
Significant Deficiency
Based on our review, we believe that the following item is a significant deficiency:

   BLM lacked adequate oversight of its subcontractors to ensure that properties were
    maintained in accordance with its contract and its own requirements (finding).




                                                  24
Appendixes

Appendix A


           Schedule of Questioned Costs and Funds To Be Put to Better Use
                Recommendation                     Funds to be put
                                    Ineligible 1/  to better use 2/
                     number
                          1B             $19,280
                          1C                6,525
                          1D                                $594,000

                        Totals            25,805             594,000



1/   Ineligible costs are costs charged to a HUD-financed or HUD-insured program or activity
     that the auditor believes are not allowable by law; contract; or Federal, State, or local
     policies or regulations.
2/   Recommendations that funds be put to better use are estimates of amounts that could be
     used more efficiently if an Office of Inspector General (OIG) recommendation is
     implemented. These amounts include reductions in outlays, deobligation of funds,
     withdrawal of interest, costs not incurred by implementing recommended improvements,
     avoidance of unnecessary expenditures noted in preaward reviews, and any other savings
     that are specifically identified. In this instance, if BLM implements our
     recommendations, HUD will stop incurring costs for properties that are not in ready-to-
     show condition or free of health and safety hazards and, instead, will spend those funds
     for properties maintained in accordance with its contract with HUD. Once BLM
     improves its oversight of its subcontractors, this will be a recurring benefit. Our estimate
     reflects only the initial year of this benefit.




                                               25
Appendix B
             Auditee Comments and OIG’s Evaluation



Ref to OIG
Evaluation    Auditee Comments




Comment 1


Comment 2




Comment 3




Comment 4




                               26
Ref to OIG   Auditee Comments
Evaluation




Comment 5




Comment 6




                            27
Ref to OIG   Auditee Comments
Evaluation




Comment 6




                            28
Ref to OIG   Auditee Comments
Evaluation




Comment 6




                            29
Ref to OIG   Auditee Comments
Evaluation


Comment 7




                            30
Ref to OIG   Auditee Comments
Evaluation




                            31
Ref to OIG   Auditee Comments
Evaluation




Comment 8




                            32
Ref to OIG   Auditee Comments
Evaluation


Comment 8




Comment 8




                            33
Ref to OIG   Auditee Comments
Evaluation



Comment 8




Comment 9




                            34
Ref to OIG   Auditee Comments
Evaluation




Comment 9




                            35
Ref to OIG   Auditee Comments
Evaluation




Comment 9




                            36
Ref to OIG   Auditee Comments
Evaluation




Comment 9




                            37
Ref to OIG   Auditee Comments
Evaluation




Comment 9




                            38
Ref to OIG   Auditee Comments
Evaluation




Comment 9




                            39
Ref to OIG   Auditee Comments
Evaluation




Comment 9




                            40
Ref to OIG   Auditee Comments
Evaluation




Comment 9




                            41
Ref to OIG   Auditee Comments
Evaluation




Comment 9




                            42
Ref to OIG   Auditee Comments
Evaluation




Comment 9




                            43
Ref to OIG   Auditee Comments
Evaluation




Comment 9




                            44
Ref to OIG   Auditee Comments
Evaluation




Comment 9




                            45
Ref to OIG   Auditee Comments
Evaluation




Comment 9




                            46
Ref to OIG   Auditee Comments
Evaluation




Comment 9




                            47
Ref to OIG
Evaluation   Auditee Comments




Comment 9




                            48
             Auditee Comments
Ref to OIG
Evaluation




Comment 9




                            49
             Auditee Comments
Ref to OIG
Evaluation



Comment 9




                            50
             Auditee Comments
Ref to OIG
Evaluation


Comment 9




Comment 10




Comment 11




                            51
             Auditee Comments
Ref to OIG
Evaluation



Comment 11




Comment 12




                            52
             Auditee Comments
Ref to OIG
Evaluation



Comment 12




                            53
             Auditee Comments
Ref to OIG
Evaluation




Comment 12




                            54
             Auditee Comments
Ref to OIG
Evaluation




Comment 12




                            55
             Auditee Comments
Ref to OIG
Evaluation



Comment 12




                            56
Ref to OIG
Evaluation   Auditee Comments




Comment 12




                            57
             Auditee Comments
Ref to OIG
Evaluation




Comment 12




                            58
             Auditee Comments
Ref to OIG
Evaluation




Comment 12




                            59
             Auditee Comments
Ref to OIG
Evaluation




Comment 12




                            60
             Auditee Comments
Ref to OIG
Evaluation



Comment 12




                            61
             Auditee Comments
Ref to OIG
Evaluation



Comment 12




                            62
             Auditee Comments
Ref to OIG
Evaluation




Comment 12




                            63
             Auditee Comments
Ref to OIG
Evaluation




Comment 12




                            64
             Auditee Comments
Ref to OIG
Evaluation




Comment 12




                            65
             Auditee Comments
Ref to OIG
Evaluation




Comment 12




                            66
             Auditee Comments
Ref to OIG
Evaluation




Comment 12




                            67
             Auditee Comments
Ref to OIG
Evaluation




Comment 12




                            68
             Auditee Comments
Ref to OIG
Evaluation




Comment 12




                            69
             Auditee Comments
Ref to OIG
Evaluation




Comment 13




                            70
             Auditee Comments
Ref to OIG
Evaluation




Comment 14




                            71
             Auditee Comments
Ref to OIG
Evaluation




Comment 14




Comment 15




                            72
             Auditee Comments
Ref to OIG
Evaluation




Comment 16




                            73
             Auditee Comments
Ref to OIG
Evaluation




Comment 17




Comment 18




                            74
             Auditee Comments
Ref to OIG
Evaluation




Comment 18




                            75
             Auditee Comments
Ref to OIG
Evaluation




Comment 18




                            76
             Auditee Comments
Ref to OIG
Evaluation




Comment 18




                            77
             Auditee Comments
Ref to OIG
Evaluation




Comment 18




                            78
             Auditee Comments
Ref to OIG
Evaluation




Comment 18




                            79
             Auditee Comments
Ref to OIG
Evaluation




Comment 18




                            80
             Auditee Comments
Ref to OIG
Evaluation




Comment 18




                            81
             Auditee Comments
Ref to OIG
Evaluation




Comment 18




                            82
             Auditee Comments
Ref to OIG
Evaluation




Comment 18




                            83
             Auditee Comments
Ref to OIG
Evaluation




Comment 18




                            84
             Auditee Comments
Ref to OIG
Evaluation




Comment 18




                            85
             Auditee Comments
Ref to OIG
Evaluation




Comment 18




                            86
             Auditee Comments
Ref to OIG
Evaluation




Comment 18




                            87
             Auditee Comments
Ref to OIG
Evaluation




Comment 18




                            88
             Auditee Comments
Ref to OIG
Evaluation




Comment 18




                            89
             Auditee Comments
Ref to OIG
Evaluation




Comment 18




                            90
             Auditee Comments
Ref to OIG
Evaluation


Comment 18




Comment 19




Comment 20




                            91
                        OIG Evaluation of Auditee Comments


Comment 1   BLM disagreed with our position that it should reimburse HUD approximately
            $25,000 for property and preservation services “allegedly” not performed and
            requested that HUD disregard our recommendation. We disagree with BLM’s
            comments. Based on our observations and supporting photographs, we identified
            properties that had interior or exterior health and safety hazards or other
            deficiencies. Therefore, we had sufficient evidence to support that our audit
            conclusions and findings were valid, and that our recommendations were
            reasonable and appropriate. During the audit, we provided BLM with supporting
            photographs along with detailed descriptions of the properties that had
            deficiencies. After the issuance of the final audit report, BLM will have an
            opportunity to work with HUD to determine the appropriate actions to be taken to
            address the audit recommendations.

Comment 2   BLM stated that it and its subcontractors performed significant work at each of
            the assigned properties, including the 109 properties cited in the report, and
            exercised reasonable due diligence to discover and correct any deficiencies. We
            disagree. Although there was documentation supporting that BLM and its
            subcontractors had performed services at the properties we observed, the
            properties cited in our audit report were not maintained in accordance with its
            contract with HUD and its own requirements. Specifically, according to its
            contract, for a property to be in ready-to-show condition, BLM was required to
            meet certain requirements, and take all actions necessary to ensure that the
            properties were being maintained in ready-to-show condition. However, based on
            our property observations, BLM did not exercise reasonable due diligence to
            ensure that the properties were maintained in ready-to-show condition in
            accordance with its contract.

Comment 3   BLM contends that OIG’s recommendation that approximately $25,000 be
            reimbursed was unreasonable and unfair and that it was not 100 percent clear how
            the amount was calculated. Further, BLM stated that it performed significant
            services at all of the questioned properties and its contract with HUD does not
            state that BLM was not entitled to payment for work performed. We disagree.
            We presented sufficient evidence to support our audit conclusions and findings,
            and that our recommendations were reasonable and appropriate to address BLM’s
            noncompliance with its contract with HUD. We also provided BLM with the
            information on how we calculated the questioned amount.

            Further, while we acknowledge that BLM’s contract with HUD did not mention
            withholding or reimbursement of payments, BLM should not be entitled to
            payment for subpar work or work that had not been performed. As previously
            stated, based on our property observations, we concluded that BLM did not




                                            92
            provide property preservation and protection services in accordance with its
            contract with HUD and its own requirements.

Comment 4   BLM stated that it had corrected thousands of other deficiencies and that some of
            the deficiencies in the report were outside of its control to discover or correct and
            were unpreventable. Further, BLM stated that the deficiencies cited for the 109
            properties still in its inventory have been corrected where initial services have
            been performed. We commend BLM on addressing other deficiencies; however,
            we can comment only on the deficiencies found at the properties we observed.
            During our audit, we were cognizant of deficiencies that could be characterized as
            being outside of BLM’s control or unpreventable, and reviewed BLM’s before
            and after inspection reports of the properties we observed, as applicable. The
            deficiencies cited in this audit report were within BLM’s control and preventable.
            However, due to BLM’s ineffective quality control process to oversee its
            subcontractors’ performance, it failed to ensure that the properties were preserved
            and protected in accordance with its contract with HUD and its own requirements.

            In addition, we reviewed the information provided by BLM with its written
            response and made changes, as appropriate. As for the deficiencies for which
            BLM did to not provide supporting documentation, it should work closely with
            HUD to determine the appropriate actions to be taken to address the audit
            recommendations.

Comment 5   BLM stated that HUD should completely disregard OIG’s recommendation that
            improving its quality control procedures could prevent $594,000 in inspection
            fees from being spent for properties that were not adequately maintained, adding
            that it was speculative and unquantifiable. Further, it contends that OIG used a
            complex and convoluted calculation to determine the amount. We disagree. We
            used common statistical sampling models to identify a representative sample of
            the properties in BLM’s inventory at the time of our observations. We used
            common projection formulas to estimate the error rate in the population sampled.
            Our methodology section for projecting the audit results to the universe, as
            detailed in the scope and methodology section of this report, is a valid statistical
            estimate of future savings. Funds to be put to better use, as defined by the
            Inspector General Act of 1978, as amended, are estimates of future HUD funds
            that could be used more efficiently if an OIG recommendation is implemented
            and does not entail repayment of funds.

Comment 6   BLM stated that in response to our audit report, it has implemented new measures
            to bolster its “already robust” corrective action plan. It also listed the measures
            including a 12-point action plan that it has put in place. We commend BLM on
            the corrective actions taken or measures implemented in response to our audit
            report. We did not test or review the implementation of these corrective actions
            or measures. BLM should work closely with HUD to ensure that it has




                                              93
            adequately improved its quality control procedures and that those procedures are
            fully implemented.

Comment 7   BLM stated that it believed that although issues were found during our
            “inspections”, its subcontractors had completed a great deal of work to bring the
            properties to ready-to-show condition. Further, it believed that the details of the
            work completed should be investigated thoroughly as completing work on HUD
            assets should not be denoted as pass or fail, and an in-depth review of the actual
            work completed by its subcontractors would negate the questioned costs of
            $19,280 in ineligible management fees for the 20 properties. We disagree. The
            report does not address or dispute whether its subcontractors completed work at
            the properties. However, contrary to HUD’s requirements, BLM’s subcontractors
            did not always perform adequate initial services, including mitigating health and
            safety deficiencies, before the properties had been promoted to step 1C, ready-to-
            show status. Therefore, BLM should not expect payment for failing to comply
            with its contract with HUD when performing subpar work. In addition, BLM did
            not provide documentation to support its assertions that a pass-fail basis would
            lead to properties that were managed in line with HUD’s requirements and
            marketable.

Comment 8   BLM acknowledged that there were deficiencies found at some of the properties
            that we observed shortly after the properties were promoted to 1C (ready-to-show
            status) but stated that it believed that there was still a great amount of work
            completed to bring these properties to ready-to-show condition based on
            contractual obligations. In addition, BLM contends that some of the issues noted
            can be attributed to changes in property conditions outside of BLM’s control.
            Also, HUD’s asset manager contractor, Sage Acquisition, determined that 88.89
            percent of the properties that we had observed were in ready-to-show condition.
            Further, it stated that 24 of the 27 (88.89 percent) properties had been sold and its
            quality of work did not seem to hinder the marketing and sale of HUD’s assets.

            As previously stated in comment 7, we are not disputing whether its
            subcontractors completed work at the properties. However, contrary to HUD’s
            requirements, BLM’s subcontractors did not always perform adequate initial
            services, including mitigating health and safety deficiencies, before the properties
            had been promoted to step 1C, ready-to-show status. BLM did not provide
            documentation to support its assertion that some of the issues noted were due to
            changes in property conditions that were outside of BLM’s control. Further, our
            audit did not include a review of HUD’s asset manager contractor or the
            marketing and sale of the properties. Although 88.89 percent of the properties we
            observed had been sold, because BLM was not ensuring that its subcontractors
            performed adequate initial services on these properties, HUD lacked assurance
            that the properties were maintained in a manner that preserved the communities
            and the value of the properties.




                                              94
Comment 9           BLM provided its response to our property observations for each of the 27
                    properties that had initial services performed before being promoted to ready-to-
                    show status. BLM generally disagreed with the cited deficiencies, with some
                    exceptions, stating certain deficiencies should have been addressed. For instance,
                    in addition to its explanation for each property, BLM indicated that 24 of the 27
                    properties had been sold. We reviewed and considered BLM’s written response
                    to the 27 properties, 7 of which we observed but did not cite in the draft audit
                    report. We made necessary adjustments to the final audit report where applicable
                    based on their explanations including that property debris can be caused by
                    weather or neighbors and that some deficiencies were not evident from pictures in
                    the prior inspection Due to the volume of information, we will provide BLM and
                    HUD a separate schedule of our evaluation and response for each property.

Comment 10 BLM contends that some of the issues we noted during our property observations
           could be attributed to property condition changes11, and that we also noted issues
           that BLM did not consider to be contractual obligations. BLM further stated that
           it could only ensure that properties were properly maintained during its routine
           inspections or when it had been notified of a potential issue, and issues that
           occurred between its inspections could be outside of its control.

                    Our evaluation of the observed deficiencies included considering whether they
                    could be attributed to property condition changes, and the issues cited in the audit
                    report were not outside of BLM’s contractual obligations. Based on our property
                    observations, 89 (86 percent) of the 104 properties were not maintained in
                    accordance with BLM’s contract with HUD or its own requirements. We
                    included in appendix C of the audit report the applicable criteria for the
                    deficiencies cited. Further, the deficiencies cited in this audit report were within
                    BLM’s control. We reviewed BLM’s before and after inspection reports for the
                    properties cited in this report, and noted that the photographs or previous
                    inspection reports did not always capture or report the locations of the
                    deficiencies we identified during our observations. Therefore, due to BLM’s
                    ineffective quality control process it failed to adequately oversee the performance
                    of its subcontractors, thus resulting in properties not being in compliance with its
                    contract.

Comment 11 BLM acknowledged that there were some routine inspections that had not been
           completed correctly, which resulted in the properties not being in ready-to-show
           condition. It stated that it has taken corrective actions to address the situation.
           Further, BLM contends that of the assigned properties from February 2, 2016, to
           July 12, 2017, 94.32 percent have been deemed maintained in ready-to-show
           condition by HUD’s asset manager contractor. We commend BLM for taking
           corrective actions. It should work closely with HUD to ensure that BLM and its

11
     These are changes that may occur between inspections or services, or may be caused by factors outside of the field
      service manager’s control.



                                                            95
              subcontractors properly complete routine inspections to ensure that the properties
              are being maintained in ready-to-show condition. Further, BLM did not provide
              documentation to support its assertion regarding the properties that had been
              determined to be in ready-to-show condition. Lastly, a review of HUD’s asset
              manager was not part of this audit. The audit reviewed BLM’s performance
              under its contract with HUD.

Comment 12 BLM provided its response to our property observations for 88 properties that had
           routine inspections. BLM generally disagreed with the cited deficiencies with
           some exceptions. In addition to its explanation for each property, BLM indicated
           that more than 70 of the 88 properties had been sold. We reviewed and
           considered BLM’s written response for the 88 properties, and made necessary
           adjustments to the final audit report. For example, we revised recommendation
           1A to account for the properties that had been sold or were no longer assigned to
           BLM. Due to the volume of information, we will provide BLM and HUD a
           separate schedule of our evaluation and response for each property.

Comment 13 BLM indicated that its internal work order requirements are goals that were not
           necessary for all properties and that photographs must be resized which limits
           their clarity. BLM’s contract with HUD describes the required property
           preservation services for HUD’s real estate-owned properties. It also requires
           BLM to mitigate health and safety hazards and maintain the properties in ready-
           to-show condition until sold. BLM’s work order internal procedures require its
           subcontractors to take a minimum of 75 date-stamped photographs of the
           properties (35 exterior and 40 interior) as evidence of the routine inspections and
           the completion of work items. However, contrary to this requirement, BLM’s
           subcontractors did not take or document in HUD’s P260 system the required
           number of photographs. During the audit, BLM explained that the requirement of
           75 photographs was essentially a goal for its subcontractors to meet. But for
           many properties including those that met the goal, the photographs were either
           blurry or too similar to existing photographs so that BLM could not adequately
           and effectively monitor its subcontractors’ performance. However, since BLM
           subcontracted out the property preservation and protection services for HUD-
           owned properties and did not perform onsite reviews for all properties in its
           inventory, it relied on the photographs and other supporting information
           submitted by its subcontractors without sufficiently verifying their work.

Comment 14 BLM contends that it tracks quality control reviews both in its system of record as
           well as the reviewers’ production log. However, it did not provide documentation
           to support its reviews. During the audit resolution process, BLM should work
           closely with HUD to determine the appropriate actions to be taken to address the
           audit recommendations.

Comment 15 BLM stated that it sends notification letters to utility providers to collect
           information needed to meet its obligations concerning lienable utilities. In



                                               96
              November 2016, HUD issued a letter of concern in which is cited BLM’s failure
              to pay utility accounts which could constitute a lien against HUD homes.
              Although noted during our survey phase, our audit did not include a review of the
              payment and processing of utility liens. Therefore, it was not cited in our audit
              report.

Comment 16 BLM contends that it modified its new subcontracts and will ensure that future
           subcontracts are signed by both parties. We commend BLM for taking the
           necessary actions to ensure that its subcontracts are signed. We identified this
           deficiency during the audit and communicated this deficiency to BLM and HUD.
           However, the deficiency was not included in our audit report.

Comment 17 We acknowledge BLM’s comments that it is no longer using the vendor that was
           responsible for providing preservation services for most of the audited homes in
           the Cincinnati area.

Comment 18 BLM contends that it has been working on addressing the issues and its internal
           controls to avoid the same issues in the future. BLM also provided its previous
           response to the initial 16 properties that we had observed during the survey phase
           of our review. We commend BLM for working on the cited issues and its internal
           controls to ensure that the issues are avoided in the future. We previously
           reviewed and considered BLM’s written response to the 16 properties and made
           necessary adjustments before we issued the discussion draft audit report to BLM
           for comment. Due to the volume of information, we will provide BLM and HUD
           a separate schedule of our evaluation and response for each property.

Comment 19 BLM contends that many of the deficiencies were out of its control and these
           deficiencies were insignificant in light of the thousands of issues that BLM
           discovered and corrected at its assigned properties daily. We disagree. See
           comment 8.

Comment 20 BLM contends that it continuously strives to improve the services provided to
           HUD in the contract 4P area and that it plans to continue communicating,
           training, and enhancing its own internal controls. We commend BLM for its
           commitment to improve its services under its contract with HUD and its
           willingness to work with HUD to ensure that it performs adequate property
           preservation and protection services.




                                               97
Appendix C
                                              Criteria

HUD Handbook 4000.1, paragraph IV.B.1, states that HUD’s management and marketing
program is HUD’s contracting network used to manage and market single-family properties
owned by or in the custody of HUD.
HUD Handbook 4000.1, paragraph IV.B.1(a)(ii), defines field service managers as HUD’s
management and marketing contractors responsible for providing property maintenance and
preservation services for properties owned by or in the custody of HUD.

HUD Handbook 4000.1, paragraph IV.B.1(a)(ii), defines asset managers as HUD’s management
and marketing contractors responsible for the marketing and sale of properties owned by or in
the custody of HUD.
HUD Handbook 4000.1, paragraph III.A.2.t.ii.C.7(a), states that the mortgagee must secure the
property to prevent unauthorized entry and protect against weather-related damage, and must
visibly display 24-hour emergency telephone contact information in a weather-tight location on a
window or door or as otherwise required by an authority having jurisdiction (AHJ).
HUD Handbook 4000.1, paragraph III.A.2.t.ii.C.7(a)(ii), states that the mortgagee must secure
all exterior doors. For exterior sliding glass doors, the mortgagee must latch these doors and
install or provide slider locks, anti-lift blocks, security bars, or another secondary security
mechanism. The mortgagee must not brace, nail shut, or otherwise block or damage the door. If
no other locking mechanism exists, the mortgagee must board/secure access doors, pet doors,
and other panels providing access to basements and crawl spaces, where permitted by state or
local law.
HUD Handbook 4000.1 III.A.2.t.ii.C.7(c)(i), states that the mortgagee must secure the pool, hot
tub, and or spa with as required by local laws, codes and ordinances. The mortgagee must
secure the pool deck or, if a cover cannot be a removable safety cover anchored to the pool deck
or, if a cover cannot be anchored to the pool deck, board or otherwise secure the pool, hot tub,
and/or spa. It also must secure or repair any fence around the pool, hot tub, and or spa to restrict
access.
HUD Handbook 4000.1, paragraph III.A.2.t.ii.C.7(f)(iv), states that the mortgagee must ensure
that fences and gates present at the first time vacant (FTV) Property Inspection are maintained in
secure and upright condition, with no missing panels or paragraphs.
HUD Handbook 4000.1, paragraph III.A.2.t.ii.C.9(b)(i), states that the mortgagee must turn all
utilities off unless prohibited by state or local law.
HUD Handbook 4000.1, paragraph III.A.2.t.ii.C.9(b)(iii), states that the mortgagee must ensure
that all installed or required sump pumps are in-place, operational, and working at all times,
where state and local law permits electricity to remain on. The mortgagee must repair or replace
any non-functioning or missing equipment.



                                                  98
HUD handbook 4000.1, paragraph III.A.2.ii (A) states, interior and exterior debris is removed,
with the property’s interior maintained in broom-swept condition, the lawn is maintained.
Broom-swept Condition is the condition of a property that is, at a minimum, reasonably free of
dust and dirt and free of hazardous materials or conditions, personal belongings, and interior and
exterior debris.
HUD Handbook 4000.1, paragraph III.A.2.t.ii(C)(7)(c)(i) states that the mortgagee must secure
the pool, hot tub, and/or spa with a removable safety cover anchored to the pool deck or, if a
cover cannot be anchored to the pool deck, board or otherwise secure the pool, hot tub, and or
spa.
HUD Handbook 4000.1, paragraph IV B 2 iii states that held off market (HOM) properties are
HUD real estate owned (REO) properties that are unavailable for sale. HUD may designate a
Property as held off market when a property, title, occupancy or other condition delays or
prohibits HUD’s ability to market or sell the property. Should the adverse condition be resolved,
HUD may then list the property for sale.
Section C.1.6 of BLM’s contract with HUD states that the purpose of this contract is to obtain
property management services as detailed in section 5.2. Field service managers are companies
that provide property maintenance and preservation services consisting of but not limited to
inspecting the property, securing the property, performing cosmetic enhancements-repairs, and
providing ongoing maintenance.

HUD has identified six primary objectives for its field services managers. They are to ensure
that (1) FHA-insured properties are maintained in a manner that preserves communities, (2)
HUD has real time access to all property-related information, (3) properties are secured and safe
from hazardous conditions, (4) property values are preserved, (5) properties are maintained in a
manner that reflects a high standard of care, and (6) there is a high level of customer satisfaction
with HUD’s property disposition program.
Section C.2.2 of the contract defines HUD-owned properties are those properties that HUD owns
by reason of payment of an insurance claim or another acquisition method. Unless otherwise
indicated, the term includes vacant land and occupied conveyed properties. HUD-owned
properties are also referred to as HUD REO (real estate owned) or HUD-homes.
Section C.2.2 of the contract defines ready-to-show condition as meeting all the following
requirements and remaining in ready-to-show condition until the property is sold and HUD is no
longer responsible for its maintenance. The property must be free of debris; insect-rodent
infestations, including mammals and reptiles; and health and safety hazards. The property must
be free of broken windows, stairs and handrails must be secure and installed according to local
code and in a manner that conforms to the esthetics of the property, exposed nails and hooks
must be removed, exposed gas lines must be capped, exposed electrical wires must be capped,
and any broken or missing outlet and switch covers in easily accessible areas must be covered.
All shelves, cabinets, counter tops, appliances, plumbing fixtures, including but not limited to
toilets, bathtubs and showers, windows, window sills, thresholds, mirrors, and shower doors,
must be clean, and the house must be free of bad odors. All floors must be cleaned and carpets
vacuumed. All graffiti, vulgarity, and pornography must be removed or covered in a


                                                  99
professional manner. All previous mortgage servicing notices and signage must be removed.
All light fixtures and ceiling fans must be clean, and window coverings that do not add value to
the property should be removed. Baseboards must be wiped clean, and the house must be free of
cobwebs.

All repairs required to correct safety hazards and any approved repairs to be done before listing
the property must be completed for the house to be in ready-to-show condition. The yard must
be free of trash and debris. Accumulated leaves and holes must be covered or filled. The grass
must be cut and bushes trimmed in a professional manner. Limbs must be cut to a minimum 18
inches away from the roof, and gutters must be free of visible debris and foliage. Snow must be
removed from driveways, walkways, and porches. Swimming pools must be properly secured
and in accordance with local ordinance, and wells, septic tanks, storm cellars, and the like must
be secured to protect the public. Safe access to all rooms must be provided at all times unless
otherwise approved by the government technical representative.

Section C.5.1 of the contract states that regardless of the type of acquisition or the property
management services required, the contractor must maintain all properties in a manner that
results in properties that are clean, safe, secure, and sanitary and preserve property value.
Section C.5.2.10 of the contract states that custodial properties are vacant properties secured by a
HUD Secretary-held mortgage, including a home equity conversion mortgage. By virtue of its
security interest, HUD has certain rights and responsibilities to ensure that the property is
preserved and protected. HUD does not hold title to custodial properties; therefore, they are not
offered for sale. Custodial properties will be assigned to the contractor either through HUD’s
case management system (P260) or through the government technical representative. Within 2
calendar days of notification of assignment, the contractor should secure the property, perform
initial services in accordance with section 5.2.2.2 to the extent that such requirements can be met
without constituting an illegal trespass, and attach a completed copy of the HUD property
inspection report as an attachment in P260. The contractor should leave the property in step 1C.
The contractor should inspect the property every 2 weeks; intervals between inspections should
be from 10 to 14 days. Property inspections performed in accordance with this schedule will
begin on day 8 of property assignment.

The contractor must maintain vacant custodial properties in accordance with the contractor’s
property management plan and at the direction of the government technical representative,
subject to the following conditions:

      Paragraph C.5.2.10.2, Ready to Show Condition - The contractor should not be required
       to keep the interior of the property clean and ready to show as described in section C-
       5.2.3.1 (ready-to-show condition) unless the unclean condition constitutes a health or
       safety hazard. However, the exterior of the property must be maintained in accordance
       with the ready-to-show condition requirements with the sole exception of personal
       property. These items of value should be moved inside a garage or structure if available.




                                                  100
      Paragraph C.5.2.10.3, Personal Property - The contractor should not remove any personal
       property unless it constitutes an imminent health or safety hazard. Debris is not
       considered personal property

Section C.5.2.2.1.2.1 of the contract states that if the inspection identifies any health and safety
conditions or there is a need for emergency repairs, the contractor must remedy any health and
safety conditions and make any emergency repairs within 1 calendar day of the inspection. The
contractor should update P260 with the corresponding work orders and before and after
photographs within 2 calendar days of completion of the remedial action. The contractor’s
responsibility to remedy health and safety hazards and emergency repairs remains until the
property closes and HUD is no longer responsible for its maintenance. The remedy of health and
safety hazards is a contractor expense. Examples of health and safety hazards include but are not
limited to faulty or missing stairs or handrails as required by local ordinance, pools and spas not
in compliance with local ordinance, tripping hazards, limbs or dead trees with a potential of
falling, chemicals, dead animals, and feces.

Section C.2.2 of the contract defines a broken window as a pane of glass that has a visible
opening that permits entry or exposure to the elements or which is so badly cracked as to
constitute a hazard. A cracked window is a pane of glass that has no more than one crack and is
still tight when pressed upon. A cracked window must have clear tape on both sides or it will be
constituted as a safety hazard.

Section C.2.2 of the contract defines health and safety hazards as any condition or situation at the
property that exposes the government to an abnormal risk that presents a source of danger, which
could cause an accident, or poses the threat of injury or harm to the public or property that must
be corrected within 1 day of discovery or notification.

Section C.5.2.2.3.6 of the contract states that the contractor must stop active leaks that may cause
deterioration of the property or pose an imminent health or safety hazard. This includes ensuring
that proper drainage is maintained around the perimeter of the property.

Section C.5.2.3.1 of the contract states that the performance work statement allows 7 days to get
the property in ready-to-show condition and promote to 1C. The contractor must ensure that the
property is in ready-to-show condition by this time and that it remains in ready-to-show
condition until it is sold, the property closes, and HUD is no longer responsible for its
maintenance.

Section C.5.2.3.2 of the contract states that the contractor must routinely inspect and take all
actions necessary to ensure that HUD properties are maintained in ready-to-show condition. The
contractor should inspect the property every 2 weeks; intervals between inspections should be
from 10 to 14 days. Property inspections performed in accordance to this schedule will begin on
day 8 of property assignment. The contractor is required to conduct routine inspections and
report inspection results on the field service manager property inspection form.




                                                 101
Section C.5.2.2.3.7 of the contract states that the contractor and all subcontractors and workmen
must sign in each time they enter the property. Sign-in sheets must be maintained in a
professional manner and replaced when full, with copies of completed sheets being uploaded into
P260.

Section C.5.2.11 of the contract defines held-off-market properties as properties assigned to the
contractor that may have a condition, such as a pending eviction, reconveyance, tenancy or
unusual condition. These properties will be identified by a held-off-market code. Some held-
off-market codes, including “Awaiting Contract” or “Offered for Direct Sale,” describe the status
of a property that will not be offered on a competitive basis. Other codes, such as “Adverse
Occupant,” denote a temporary delay in marketing unless otherwise directed. The contractor
should manage properties with held-off-market codes in accordance with the applicable
requirements of section 5.2.

Section C.5.2.2.3.5 of the contract states that the contractor should perform winterization of all
operating systems in accordance with the requirements of mortgagee letter 2010-18 or any
subsequent policy directives.

Section C.5.2.6.2 of the contract states that the contractor must remedy at its expense small
amounts of mold not to exceed 25 square feet in any single area. For larger areas, the contractor
should notify the government technical representative of any property with obvious evidence of
mold or organic growth that in the opinion of the contractor, poses a potential health or safety
hazard or inhibits marketing.

Section C.5.1.7.1 of BLM’s contract states that the contractor must update, maintain, and
implement a comprehensive quality control plan consistent with the quality control plan
submitted after the postaward conference. The contractor’s quality control plan must ensure that
all aspects of this performance work statement, in accordance with the performance standards
listed, are performed completely and appropriately and should contain a plan for corrective
action when deficiencies or insufficient performance is identified by either HUD or the
contractor. The quality control plan should be designed and implemented to result in quality and
timely contract performance. The quality control plan should, at a minimum, (1) include a
detailed inspection oversight program covering all general and specific tasks; (2) specify tasks or
areas to be inspected on either a scheduled or unscheduled basis, including the manner in which
inspection is to be conducted; (3) describe the techniques to be employed for producing and
validating services and deliverables that conform to the acceptable quality standards in the
contract; (4) describe the checks and balances that will be used to ensure an acceptable level of
quality; (5) provide for responding to technical directions and comments; and (6) provide
measures to prevent and eliminate the potential for fraud, waste, and abuse of HUD funds or
other funds and resources received in the performance of this contract.

Section 5.2.2.2 of BLM’s property management plan states that locks will be changed consistent
with HUD specifications, which must permit access into the house by HUD employees and
broker-subcontractor access. All doors, crawlspaces, garages, and similar points of possible




                                                  102
entry will be secured to prevent unauthorized entry, using generally accepted preservation
practices.

Section 5.2.2.3 of the plan states that initial cleanout services will include removing or repairing
tripping hazards and holes in floors. They also include surveying the entire property to identify
active water leaks and immediately repair all leaks unless severity requires reconveyance. All
ceilings must be reviewed for evidence of roof leaks or moisture, attic area for evidence of roof
leaks, and basement areas for evidence of water leaks, and a determination must be made of
whether the leak is from an internal water system or from an external water source. Active water
leaks will be noted on the HUD property inspection report or field service manager inspection
forms, and before and after photographs will be provided in P260.

Section 5.2.3 of the plan states that tasks to ensure that property is secure and in a ready-to-show
condition include ensuring that property is secure and kept free of debris, the yard is maintained,
property cleanliness is maintained, the property is free of hazardous conditions, and snow is
removed in a timely manner.

BLM’s HUD Management and Marketing III field service manager contractor presentation states
that (1) all notices, signs, or stickers from previous work completed by others must be removed;
(2) if the contractors discover a safety fence around large holes in the yard, open wells, or
missing manhole or drain covers, they must remediate the condition due to health and safety
concerns; (3) loose ceiling materials that can fall should be removed as debris due to health and
safety concerns; (4) the contractor should tape or tack down any areas of ripped carpeting that
create a tripping hazard; and (5) the contractor should remove and tape or tack any areas of
broken or missing tile and cut or tape loose linoleum.

BLM’s initial service vendor checklist states that vendors must ensure that all items listed have
been completed and checked off before leaving the property. All items must have clear photos
submitted documenting work completed. A clear photo is required of the sign-in sheet at
departure with appropriate legible signature and arrival or departure time.

BLM’s initial service vendor checklist, property exterior section, states that all grass, shrubs, tree
clippings are cleaned up and removed from property. All exterior debris are removed to include
under decks, behind garages, in crawlspaces, off of roofs and out of gutters. The vendor must
ensure water is directed away from the foundation. For instance, downspout extensions are
directed appropriately.
BLM’s initial service vendor checklist, janitorial section, states that vendors clean or wipe down
all walls, ceiling fans and fan blades. It also requires vendors to remove all debris to include
debris in the rafters or attic areas and all cobwebs from all areas including but not limited to
basements, all doorways, crawlspaces and access areas.
BLM’s initial service vendor checklist, bathroom section, states that vendors remove toilet seat
covers and install blue painters tape over the bowl, sign and date for winterization purposes
BLM’s initial service vendor checklist, health and safety section, states that vendors ensure to:



                                                  103
      Remove all protruding nails, screws from all interior and exterior walls of all structures,
       including fences or gates. Cap all exposed wiring with wire caps. Electrical or duct tape
       is not allowed.
      Install covers on all electrical outlets and switch plates where missing throughout the
       property
      Remove exposed tack trips to include closet area
      Install transition strips, or appropriate mark threshold areas with red duct tape as
       necessary in doorway where carpet/ vinyl/ tile is loose/ damaged or heights difference is
       higher than one fourth of an inch.
      Install weatherproof covers on all exterior outlets and switches
      Ensure that all electrical breakers are in the off position, unless there is active power for a
       sump pump, or for winterization purpose.
      Secure loose or hanging siding, soffits and or fascia.
      Remove any active or inactive wasp, or hornet, or bird nest from interior and exterior of
       all structures.
      Remove all glass shards on the ground, in window frame
      Install marking flags at all protruding tree roots, uneven surfaces in all yards.
      Cap or plug all open water and gas lines
      Install handrails at step three or more rises and install guardrails on any porch or deck 24
       inches or higher including a mid-rail halfway up to the top rail
      Secure all exterior and interior handrails and guardrails if loose.
      Secure all loose or damaged carpeting vinyl flooring or tiles, unless carpeting is pet
       stained and damaged beyond repair and will be removed. Remove damaged or stained
       carpeting with approval from project manager or contract manager
      Abate mold-lie substances up to 25 square feet per area
      Tape minimal cracks on windows.

BLM’s initial service vendor checklist, securement section, states that vendors repair or replace
all exterior access doors to ensure they shut and lock, repair or replace all glass in windows, re-
glaze up to 4 windows, and board up pet doors and dryer vent holes.

BLM’s work order descriptions, photograph requirement for routine inspection section, states
that a minimum of 75 date-stamped photographs must be submitted with each routine inspection
work order. All exterior needs pictures documented to show lawn maintained and the sign in
sheet after signing-un and clear pictures for all postings. Routine inspection work order will
include photographs of sump pump if present and lighted electrical tester showing power to the
outlet providing power to the sump pump. Pictures are required of electric panel showing
breaker positions. The breaker should be off unless there is a sump pump and or dehumidifier.
If electrical panel is taped, shut and secure, vendors take photos showing panel is shut and
secure. It further states that vendors correct the issue if there are any issues or deficiencies
present as part of theirs routine inspection fee.

BLM’s work order descriptions, initial services section for HUD-owned vacant, states that initial
yard maintenance is to be completed at all times. Vendors remove and dispose of all refuse,



                                                  104
debris, junk, leaves, lawn paraphernalia and other objects not ordinarily kept on a lot and other
exterior areas including carports.




                                                 105
                  Appendix D
                                    Schedule of OIG Routine Inspection Property Observation Results
                                                                                                   Deficiency type
                  case number




                                         Results
Identification




                                                                    Health and safety                                    Other deficiencies




                                                                                                                                                                 deficiencies
   number


                     FHA




                                                                                                                                                                    Total
                                                       Exterior




                                                                                                             Exterior
                                                                  Number




                                                                                        Number




                                                                                                                        Number




                                                                                                                                              Number
                                                                  exterior

                                                                             Interior




                                                                                                                        exterior

                                                                                                                                   Interior
                                                                                        interior




                                                                                                                                              interior
                                Pass12




                                                                                                     Total




                                                                                                                                                         Total
                                              Fail13




RI1                                             X                               X             2         2                             X          1          1         3
                 412-523364
RI2                                             X                                                                X         1          X          1          2         2
                 412-463883
RI3                                             X         X          1                                  1        X         2                                2         3
                 412-420698
RI4                                             X                               X             2         2                                                             2
                 412-503803
RI5                                             X         X          1          X             1         2        X         1                                1         3
                 412-623455
RI6                               X
                 412-557916
RI7                                             X         X          1                                  1        X         3                                3         4
                 412-560654
RI8                               X
                 412-700713
RI9                                             X                               X             2         2        X         1          X          2          3         5
                 411-491088
RI10                                            X                               X             4         4        X         1          X          2          3         7
                 411-423079
RI11                                            X         X          2                                  2        X         1          X          1          2         4
                 411-421498
RI12                              X
                 411-348567
RI13                                            X         X          1          X             1         2        X         1          X          3          4         6
                 411-306179
RI14                                            X                               X             1         1        X         2                                2         3
                 411-355824
RI15                                            X         X          1                                  1                                                             1
                 411-351805
RI16                                            X         X          1          X             1         2        X         3                                3         5
                 411-511323
RI17                                            X                               X             2         2                                                             2
                 412-487706
RI18                              X
                 412-758879




                  12
                     Pass is defined as property preservation and protection services that were in accordance with BLM’s contract with
                  HUD and its own requirements.
                  13
                     Fail is defined as property preservation and protection services that were not in accordance with BLM’s contract
                  with HUD, its own requirements, or both.



                                                                                        106
                   case number                                                                  Deficiency type
                                        Results
Identification




                                                                 Health and safety                                    Other deficiencies




                                                                                                                                                              deficiencies
   number


                      FHA




                                                                                                                                                                 Total
                                                    Exterior




                                                                                                          Exterior
                                                               Number




                                                                                     Number




                                                                                                                     Number




                                                                                                                                           Number
                                                               exterior

                                                                          Interior




                                                                                                                     exterior

                                                                                                                                Interior
                                                                                     interior




                                                                                                                                           interior
                                                                                                  Total




                                                                                                                                                      Total
                                 Pass


                                             Fail
RI19             412-532456                   X        X          1                                  1        X         1                                1         2
RI20                                          X        X          1                                  1                                                             1
                 412-652706
RI21                                          X        X          1                                  1                                                             1
                 412-517452
RI22                                          X        X          1          X             1         2                             X          2          2         4
                 412-635093
RI23                                          X                                                               X         1          X          1          2         2
                 412-418025
RI24                                          X                                                               X         1          X          2          3         3
                 412-556767
RI25                                          X        X          1          X             1         2        X         1          X          1          2         4
                 412-624093
RI26                                          X        X          2                                  2                                                             2
                 412-541056
RI27                                          X                              X             2         2        X         1          X          1          2         4
                 412-591923
RI28                                          X                              X             2         2        X         1                                1         3
                 412-360143
RI29                                          X        X          1                                  1        X         1          X          1          2         3
                 412-597752
RI30                                          X                              X             1         1                             X          2          2         3
                 412-463432
RI31                                          X                              X             2         2                             X          1          1         3
                 412-716226
RI32                              X
                 412-600855
RI33                                          X        X          1          X             1         2        X         3          X          1          4         6
                 411-469342
RI34                                          X                              X             1         1        X         1                                1         2
                 411-320989
RI35                                          X                              X             2         2                                                             2
                 411-411019
RI36                                          X        X          1          X             2         3        X         1                                1         4
                 411-375900
RI37                              X
                 411-437568
RI38                                          X        X          1          X             3         4                             X          1          1         5
                 411-421118
RI39                                          X                              X             1         1        X         1                                1         2
                 411-349111
RI40                                          X        X          1          X             1         2        X         2                                2         4
                 411-389959
RI41                                          X        X          1          X             1         2                                                             2
                 412-532516




                                                                                     107
                                                                                               Deficiency type
                                       Results
                  case number
Identification




                                                                Health and safety                                    Other deficiencies




                                                                                                                                                             deficiencies
   number


                      FHA




                                                                                                                                                                Total
                                                   Exterior




                                                                                                         Exterior
                                                              Number




                                                                                    Number




                                                                                                                    Number




                                                                                                                                          Number
                                                              exterior

                                                                         Interior




                                                                                                                    exterior

                                                                                                                               Interior
                                                                                    interior




                                                                                                                                          interior
                                                                                                 Total




                                                                                                                                                     Total
                                Pass


                                            Fail
RI42                                         X        X          2          X             3         5        X         1                                1         6
                 412-726242
RI43                                         X                              X             1         1                                                             1
                 412-634889
RI44                                         X                              X             2         2        X         1          X          1          2         4
                 412-535593
RI45                                         X                              X             2         2                                                             2
                 412-494638
RI46                                         X                              X             1         1        X         1          X          1          2         3
                 412-687426
RI47                                         X                                                                                    X          1          1         1
                 412-664532
RI48                                         X                              X             3         3                             X          3          3         6
                 412-658075
RI49                                         X                              X             1         1                                                             1
                 412-567270
RI50                                         X                              X             3         3        X         3          X          1          4         7
                 412-411602
RI51                                         X                              X             1         1        X         1          X          1          2         3
                 412-493104
RI52                             X
                 412-561945
RI53                             X
                 412-661552
RI54                                         X                              X             1         1                             X          1          1         2
                 412-620804
RI55                                         X        X          1                                  1                                                             1
                 412-515316
RI56                             X
                 412-632250
RI57                                         X                              X             3         3        X         1          X          1          2         5
                 413-502284
RI58                                         X                                                               X         1                                1         1
                 411-452165
RI59                                         X        X          1          X             3         4        X         1                                1         5
                 411-349650
RI60                                         X        X          1          X             3         4        X         1                                1         5
                 411-470160
RI61                                         X                                                               X         2                                2         2
                 411-356072
RI62                                         X                              X             3         3        X         1          X          1          2         5
                 411-414595
RI63                                         X                              X             2         2        X         3                                3         5
                 411-385801




                                                                                    108
                  case number                                                                  Deficiency type
                                       Results
Identification




                                                                Health and safety                                    Other deficiencies




                                                                                                                                                             deficiencies
   number


                     FHA




                                                                                                                                                                Total
                                                   Exterior




                                                                                                         Exterior
                                                              Number




                                                                                    Number




                                                                                                                    Number




                                                                                                                                          Number
                                                              exterior

                                                                         Interior




                                                                                                                    exterior

                                                                                                                               Interior
                                                                                    interior




                                                                                                                                          interior
                                                                                                 Total




                                                                                                                                                     Total
                                Pass


                                            Fail
RI64                                         X                              X             3         3                             X          1          1         4
                 411-402250
RI65                                         X                              X             1         1        X         1                                1         2
                 411-410078
RI66                                         X        X          1          X             1         2        X         2          X          2          4         6
                 411-515624
RI67                             X
                 411-541970
RI68                                         X                              X             2         2        X         1                                1         3
                 411-350162
RI69                                         X        X          1          X             2         3        X         2          X          1          3         6
                 411-461544
RI70                                         X                              X             4         4        X         1          X          1          2         6
                 411-365017
RI71                                         X                              X             2         2        X         2          X          1          3         5
                 411-428660
RI72                                         X                              X             1         1                             X          1          1         2
                 411-517735
RI73                             X
                 413-499430
RI74                                         X                              X             6         6        X         2                                2         8
                 413-402622
RI75                             X
                 412-643552
RI76                             X
                 412-538011
RI77                                         X                              X             4         4        X         1                                1         5
                 412-745418
RI78                                         X        X          2          X             3         5                             X          1          1         6
                 413-477337
RI79                                         X        X          1          X             2         3                             X          3          3         6
                 413-464797
RI80                             X
                 413-565320
RI81                                         X                              X             2         2        X         1                                1         3
                 413-512105
RI82                                         X                              X             1         1        X         1                                1         2
                 413-522903
RI83                                         X                              X             1         1                                                             1
                 411-386540
RI84                                         X        X          1          X             2         3                                                             3
                 411-403612
RI85                                         X                              X             2         2                             X          1          1         3
                 411-398025




                                                                                    109
                                                                                                 Deficiency type
                                        Results
                   case number
Identification




                                                                Health and safety                                      Other deficiencies




                                                                                                                                                               deficiencies
   number


                       FHA




                                                                                                                                                                  Total
                                                    Exterior




                                                                                                           Exterior
                                                               Number




                                                                                      Number




                                                                                                                      Number




                                                                                                                                            Number
                                                               exterior

                                                                          Interior




                                                                                                                      exterior

                                                                                                                                 Interior
                                                                                      interior




                                                                                                                                            interior
                                                                                                   Total




                                                                                                                                                       Total
                                 Pass


                                             Fail
RI86                                          X                              X              2         2                             X          1          1         3
                 411-334698
RI87                                          X                              X              3         3                             X          1          1         4
                 411-372084
RI88                                          X        X          1          X              2         3        X         1          X          1          2         5
                 411-385733
RI89                                          X                              X              1         1        X         2          X          1          3         4
                 411-488068
RI90                                          X                              X              1         1        X         1                                1         2
                 411-379346
RI91                                          X                              X              3         3                                                             3
                 411-357383
RI92                                          X                                                                X         1                                1         1
                 411-456118
RI93                                          X        X          2                                   2        X         1                                1         3
                 411-494569
RI94                                          X        X          1                                   1                             X          1          1         2
                 411-371622
RI95                                          X        X          1          X              2         3                                                             3
                 411-507952
RI96                                          X                              X              1         1        X         2          X          1          3         4
                 411-249726
RI97                                          X                              X              1         1        X         1          X          1          2         3
                 411-471926
RI98                                          X                                                                X         1                                1         1
                 411-362361
RI99                                          X                              X              4         4                                                             4
                 413-445794
RII00                                         X                              X              2         2                                                             2
                 413-614752
RI101                                         X        X          1                                   1        X         1                                1         2
                 413-528807
RI102                                         X                              X              3         3                                                             3
                 413-408863
RI103                             X
                 413-457012
RI104                                         X        X          1          X              3         4        X         1                                1         5
                 413-413599
Total                             15          89      34         39         68             136      175       54        74         41         53        127       302




                                                                                     110
                 Appendix E
                                          Schedule of Initial Services Property Observation Results

                                                                                                Deficiency type
                  case number




                                       Results
Identification




                                                               Health and safety                                      Other deficiencies




                                                                                                                                                              deficiencies
   number


                     FHA




                                                                                                                                                                 Total
                                                   Exterior




                                                                                                          Exterior
                                                              Number




                                                                                     Number




                                                                                                                     Number




                                                                                                                                           Number
                                                              exterior

                                                                         Interior




                                                                                                                     exterior

                                                                                                                                Interior
                                                                                     interior




                                                                                                                                           interior
                                                                                                  Total




                                                                                                                                                      Total
                                Pass


                                            Fail




IS1              413-613550                  X        X          1          X             2          3        X         2          X          1          3         6
IS2              412-550868      X
IS3              412-443667                  X        X          1          X             1          2        X         1          X          1          2         4
IS4              412-656192                  X                              X             1          1                                                             1
IS5              412-712153      X
IS6              412-613019                  X        X          1          X             3          4                                                             4
IS7              412-609252                  X        X          2          X             5          7        X         1          X          1          2         9
IS8              412-619649                  X        X          1          X             1          2        X         1          X          1          2         4
IS9              412-685170                  X        X          2          X             4          6                             X          1          1         7
IS10             412-500885                  X                              X             1          1        X         1          X          2          3         4
IS11             412-637212      X
IS12             413-601099                  X                              X             1          1                                                             1
IS13             413-419063                  X                              X             3          3        X         1                                1         4
IS14             413-458581                  X        X          1          X             2          3                             X          1          1         4
IS15             413-525234                  X                              X             2          2        X         2          X          1          3         5
IS16             413-447190                  X                              X             3          3                             X          1          1         4
IS17             413-322686                  X                              X             3          3        X         2                                2         5
IS18             413-476605      X

IS19             411-403841                  X        X          1          X             4          5                             X          1          1         6
IS20             411-374195                  X                              X             3          3        X         1                                1         4
IS21             411-442471      X




                                                                                    111
                  case number                                                                   Deficiency type
                                       Results
Identification




                                                               Health and safety                                      Other deficiencies




                                                                                                                                                              deficiencies
   number


                     FHA




                                                                                                                                                                 Total
                                                   Exterior




                                                                                                          Exterior
                                                              Number




                                                                                     Number




                                                                                                                     Number




                                                                                                                                           Number
                                                              exterior

                                                                         Interior




                                                                                                                     exterior

                                                                                                                                Interior
                                                                                     interior




                                                                                                                                           interior
                                                                                                  Total




                                                                                                                                                      Total
                                Pass


                                            Fail
IS22             411-285939      X
IS23             411-390992                  X        X          2          X             2          4        X         1                                1         5

IS24             411-403945                  X        X          2          X             2          4        X         2          X          1          3         7
IS25             411-394966                  X        X          1                                   1        X         1                                1         2
IS26             411-473486                  X        X          1          X             2          3        X         1          X          1          2         5
IS27             413-607648      X
Total                             7          20      12         16         19          45           61       13        17         12         13         30        91




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