At
the request of the industry, the Department is clarifying the debris
removal guidance that was provided in Mortgagee Letter 2003-05,
page 4. The guidance cautioned mortgagees that second bids were
to be independent and competitive and that the second bids were
not to be channeled through the same national field service company
that the mortgagee may have used to obtain the initial bid.
The
Department delayed enforcement of this requirement until June 20,
2003. During that delay, mortgagees were not considered to be in
violation of this requirement in circumstances where a national
field service company provided the initial bid and also provided
assistance to the mortgagee in obtaining the second bid.
The
following Questions and Answers are provided to assist in clarifying
the second bid for debris removal requirements identified in Mortgagee
Letter 2003-05, issued April 4, 2003.
1.
My company uses a national field service provider company. Is it
permissible to use only my national field service provider for both
bids?
Each bid must be provided by a separate contractor
and both bids must be separate and independent. The second bid
is to be an independent and competitive bid and must not be channeled
through the same source.
2.
Then, am I required to use two separate national field service providers
in order to get two independent and competitive bids?
No. The mortgagee may obtain the second bid from any
firm of their choice, provided that the second bid is independent
and competitive and was not channeled back through the same national
field service provider.
3.
Can the national field service provider that I am using provide
me with names of companies that may perform debris removal for the
purpose of obtaining the second bid?
Yes, The mortgagee should use all resources available
including referrals from peers, trade associations and even yellow
pages in obtaining the second bid since the lender remains accountable
to ensure that the two bids are both independent and competitive.
4.
Can the national field service provider that I am using order the
second bid?
Yes. The national field service provider may order
the second bid for debris removal, however the completed bid must
be submitted directly to the mortgagee and not channeled back
through the national field service provider. This will ensure
the bid is independent and competitive.
5.
What is meant by "channeled"?
The Department expects that the second bid is independent
and competitive and that there is no appearance that the entity
that provided the first bid altered its bid or provided information
to the second contractor regarding the property. The second bid
must be based upon an independent evaluation at the site and not
based upon information provided by the first contractor. In addition,
there must be no appearance of a conspiracy in the development
of the two bids.
6.
Can the field service provider obtaining the second bid meet the
primary contractor at the property site for access inside, if necessary?
Yes. The primary contractor can meet the secondary
contractor at the property for access. This will not always be
necessary as lock codes are the same in each region, and if a
contractor has previously done work on a FHA-insured mortgaged
property, he is likely to have the designated key.
7.
Can the second bid go directly to the management and marketing (M&M;)
contractor?
Under no circumstances may the mortgagee allow field
service providers or contractors to process and submit either
bid directly to the M&M; contractor without the mortgagee's review
and approval of both bids. Both bids are the responsibility of
the mortgagee to ensure that each is independent and competitive.
The bids upon approval by the mortgagee, may then be forwarded
to the M&M; contractor.
8.
If the second bidder is the lowest, how is that contractor compensated?
The mortgagee may either pay the contractor directly,
or may use its national field service contractor to issue payment
to the contractor that performed the work.
9.
Was there an extension beyond June 20, 2003 for the implementation
of this part of ML 2003-05?
No. This provisions of ML 2003-05 were effective June
20, 2003.
|