REO Workshop Session 3
Accurately Utilizing Allowables and
Bidding Damages
Presenters:
John Patriarche and Joe Venti
REO Fundamentals Overview
• REO bidding procedures
• Safety hazards
• Maximizing revenues
REO Damage Reporting
• Damage reporting requirement
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During completion of initial services
Upon discovery of new damages to the property
Client request
Restate existing damage on subsequent orders
• Out of scope damages
– Must be documented on update
– Provide an eyeball estimate
– Client may request a bid after update review
Missing Items
• Items such as stoves, refrigerators, water heaters, AC
units, plumbing lines, etc. need to be bid. These are
considered missing even if it appears the previous
mortgagor removed it.
Exterior Damages
• This can include missing siding or roof repairs. This
can be the result of previous storm damage or
general neglect from the previous owner.
Water Damages
• This can include damage to the drywall, carpeting, or
any of the ceilings.
Freeze Damages
• This can include not only damage to the copper or
plumbing system, but any damage to appliances as a
result of the frozen system.
Bidding Client Specific Requests
• Vendors are expected to know client parameters and
specific expectations regarding damages discovered
upon completion of services to the property. It must
be understood that each client has their own set of
rules on how they view and remediate damages on
their REO inventory. We will look at a some of those
examples.
Bidding Client Specific Requests
Mold/Discoloration
• FNMA properties: mold/discoloration is to be
reported as damage but no bid is to be provided
• Non-FNMA properties: if the mold/discoloration is
less than 100 contiguous feet, then a bid to treat and
remediate is required
• If the mold is greater that 100 contiguous feet, then
it is only to be reported as damages
VS.
Bidding Client Specific Requests
Graffiti
• BANA has graffiti removal built in their allowable and
can be addressed during the completion of services
at the property
• Non-BANA clients all require a bid for removal to be
submitted
Standard Bid Descriptions
• Details are essential:
– Labor: How many man hours will it take to complete?
o Example: Three individuals at 8 hours = 24 hours
– Materials: What specific items are needed to complete?
o Example: Install 38 LF of ½” copper and 180 sq. ft. of paint to
cover graffiti
– Permits and fees: Understanding local ordinances and
specific permit costs associated with repairs
o Example: Roof repairs vs. roof replacement permitting
Why Detail is Important
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Loss of potential revenue
Failed bid returns due to lack of detail
Validating true scope of work
Justifying submitted bid amounts
– Bid A
o Bid remediate damage: $496.35
o Bid to remediate damage description: remove/replace 16 linear
feet of ½” copper and two shut-off valves
– Bid B
o Bid remediate damage: $1,000
o Bid to remediate damage description: fix visible damage and any
additional damages found
How to Submit a Bid
• In General Property Information, notate the damage
in the proper Property Information section (if
applicable). For this case, the siding on the home is
damaged and needs to be noted in the Exterior
Property Information section.
How to Submit a Bid
• While still under the General Property Info tab, select
the “Miscellaneous” box under the Type of
Additional Work header. This will prompt the
Miscellaneous Work Completed and Miscellaneous –
Bids sections.
How to Submit a Bid
• Select the dropdown menu for Add New Bid and
select Other. By selecting Other, you will be putting in
a Miscellaneous bid. Miscellaneous bids allow you to
create custom bid titles and provide more characters
for entering a description. The more detailed you can
be in your bid description, the better.
How to Submit a Bid
• Enter a title for your bid and a detailed description;
outlining man hours to completed, exact materials
needed, and all dimensions. Remember, you are
relying on this description to justify your Bid Amount.
Lastly, drag your supporting photos into the “Drag
Image Here” box from your Image Gallery.
How to Submit a Bid
• Don’t forget to review your update before
submission to prevent any errors.
• Your bid will appear like this during your preview of
your update:
REO Bidding Conclusion
• Questions to ask while completing the bid process:
– Does the damage need to be repaired or replaced?
– Will the source of the damage be addressed or
reoccurring?
– Should the damage be bid or do we have approval to
complete within the allowables?
Safety Hazards
• A safety hazard on an REO property represents
conditions identified by each client individually that
could potentially be dangerous to the property, to
the neighboring property, or to the individuals on or
inside the property.
– As standard across Safeguard Properties, each client has
their own set of designated safety hazards that need
addressed which are outlined in the work order.
Understanding Safety Hazards
• Each of your employees should be aware of what
safety hazards are, how to identify them, and how to
correct them. This includes both the field crews, the
office and administration staff, and any quality
control individuals designated for your operations.
– All safety hazards that are not correctly addressed and
found by Safeguard QC, third party inspections, or our
clients are subject to financial penalties.
Identifying Safety Hazards
• Below is a list of common safety hazards across all
clients that require immediate action or bids to be
submitted:
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Broken or damaged windows
Electrical and gas items
Interior and exterior handrails/guardrails
Floors and trip hazards
Smoke and CO2 detectors
Plumbing
Broken or Damaged Windows
• Broken glass must be removed from the ground as
well as the window frames
• All cracked glass must be taped with clear tape along
the length of the crack
• All ground floor windows must be shut and securely
locked
Electrical and Gas Fixtures
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Review for exposed electrical outlets and switch plates
Review for exposed or open electrical lines
Review for open gas lines
Secure all loose light fixtures
Roll and zip tie all loose or low hanging electrical cords
Review for missing breaker inserts or missing electrical
panel doors
Interior and Exterior
Handrails/Guardrails
• Review for stairways, porches or landings that
contain three or more risers
• Review for stairways, porches or landings that
contain three or more risers
• Review for fall hazards that are 24 inches or greater
Interior and Exterior
Handrails/Guardrails
• Completed handrails and safety rails must be
installed to assure requirements are met as well as
maintain functionality. This includes:
– Property materials (proper brackets, interior grade
handrail vs. treated 2x4)
– Property spacing and measurements
– Installation must not cause any further damage to the
property
Floors and Trip Hazards
• Review for:
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Open holes in floors or missing floor vents
Existing carpet tack strips
Curling linoleum
Exterior holes or hazards to include the yard, porch, or
decking
CO2 and Smoke Detectors
• Review local code to determine any specific
parameters regarding city requirements
• Review to determine if there is a working smoke
detector on each floor of the property
• Review to determine if there are working CO2
detectors in the property
– This includes assuring any existing smoke or CO2 detectors
are operational and are installed properly on the wall or
ceiling, or replaced/bid as necessary according to client
parameters
CO2 and Smoke Detectors
*Please note that combined smoke/CO2 detectors are not
acceptable and must remain separate.
Plumbing Lines and Fixtures
• Open:
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Washer hookup lines
Sink or toilet supply lines
Sewer lines
Refrigerator water lines
Water heater valves
Important Safety Hazard Memos
• Memo 1380: REO Quality Approach
– Discusses quality control requirements independent
inspections inventory becomes subject to
• Memo 1522: Proper Installation of Handrails/Guardrails
– Discusses proper installation where necessary and links to the
video guides
• Memo 1534: Smoke and CO2 Detector Requirements
– Discusses required documentation of existing or new
hazardous detection devices in the property
• Memo 1539: Sump Pump Cover Requirements
– Discusses requirements for missing sump pump covers,
including materials and invoicing
Important Safety Hazard Memos
• Memo 1554: Solutionstar REO Policy Updates
– Discusses updates regarding safety hazards specifically
customized for Solutionstar with a link to their check
• Memo 1575: Revised REO Guidelines for FNMA
Properties
– Discusses specific scenarios regarding lack of broker
communication and proper updating instructions
*Memos are important as they not only contain new and
updated information regarding REO requirements and
safety hazards, but can outline client specific parameters
and then shared with your operation teams immediately.
Why Are Memos Important?
• They contain new and updated information regarding
REO requirements and safety hazards
• They potentially outline client specific parameters for
you to immediately share with your operation team
Safety Hazards Conclusions
• Identifying safety hazards must be completed on all
orders as they can either be addressed on-site or bid
to the client accordingly
• All divisions of your company must be aware of
safety hazards and how to identify them
• Failure to address these items properly puts the
relationship between Safeguard and the client in
jeopardy as well as the relationship between the
Safeguard and the vendor in jeopardy
Maximizing Revenues
• Maximizing your potential revenue through REO
services involves knowing your client and their
parameters. This includes:
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Following the work orders thoroughly
Understanding and completing allowables
Providing all required documentation
Minimizing follow up and return orders
Following Work Orders Thoroughly
• Every order opened through Vendor Web provides
instructions regarding the work to be completed.
This includes detailed instructions of the approved
scope, any work that may be potentially seasonal
(i.e. grass cut or winterization), and any information
regarding the bid vs. complete on-site
*Notice the specific dates
outlines in the winterization
timeframes.
Understanding and Completing
Allowables
• Client allowables differ from one another according
to the items they approve to be completed on-site
vs. the items a bid is required for
– Example: bidding to repair a FNMA fence or gutter when
there already is an existing allowable
• Providing detailed broker communication to include
services recommended
– Example: landscape packages, roof and gutter packages,
and exterior window cleaning packages
Understanding and Completing
Allowables
Providing All Required Documentation
• Debris removed according to cubic yard training
including placards and measurements:
Providing All Required Documentation
• Timely photo documentation of before, during and
after services are completed
Providing All Required Documentation
• Effective use of the placard system yields higher
payment percentage
Minimizing Follow-Ups and Reopens
• Providing accurate and precise updates for all
existing conditions at the property
• Providing all broker updates and recommendations
into your order
• Thorough completion of all necessary checklists with
accuracy and dedicated quality control
Long Term Financial Effects
• Approximately 3,500 inspections were completed on
FNMA properties in March. 20% of these inspections
failed. Follow-up orders were opened to correct the
issues. The following financial losses occurred:
– 47 maintenance vendors were found to have failing
properties
– Approximately $3,000 was lost in safety hazards
– This calculates to $63 in lost safety hazards per initial
service completed
Long Term Financial Effects
• If a vendor completes four initial services per week:
– $252 in lost billing per week
– $1,008 in lost billing per month
– $12,096 in lost billing per year
*All lost revenue is additional to the time and
expenses involved in returning to the property at
your cost.
Maximizing Revenues Conclusion
• The knowledge and understanding of client
parameters and allowables provide a direct result to
your bottom dollar.
• Knowledge of billable items, allowables, packages,
and pricing are not limited to the field work
completed. This needs to be understood by the office
and administration as well as your quality control
process.
• Increase in revenue extends beyond the work
completed; this includes the proper documentation
and updating of the work completed.
Questions?