Department of Veterans Affairs Seal
DEPARTMENT OF VETERANS AFFAIRS
Regional Office
PO Box 100023
Decatur GA 30031-7023
www.vba.va.gov/ro/atlanta/rlc



February 20, 2007
In Reply Refer to: 316/263
Loan Guaranty Bulletin 263-07-04


To:   ALL LENDERS, HOLDERS, AND SERVICING AGENTS
Subj:  
EXPENSES FOR PRESERVATION OF SECURITY FOR GUARANTEED LOANS
IN GEORGIA, TENNESSEE, NORTH CAROLINA, AND SOUTH CAROLINA
1.  PURPOSE: Holders of loans guaranteed by the Department of Veterans Affairs (VA) and holders of VA Regulation (VAR) 4600 loans are responsible for taking proper measures to protect and preserve property pledged as security for these VA Guaranteed and VAR 4600 loans. This bulletin describes the minimum requirements for securing vacant properties and the maximum expenses allowed for properties which are used for security for VA Guaranteed and VAR 4600 loans in Georgia, Tennessee, North Carolina and South Carolina. For occupied properties, VA will reimburse for the first and last inspections. For vacant properties, VA will reimburse for all inspections. It is not our intent to regulate the amounts that holders pay to protect and preserve properties or to decide what measures the holder needs to take to preserve a property. Our purpose is to specify the maximum amount that will be reimbursed by this Regional Loan Center (RLC).

2.  EFFECTIVE DATE: This policy is effective for all VA loan foreclosures on or after March 1, 2007.

3.  PRIOR APPROVAL: PRIOR APPROVAL IS NOT REQUIRED AND WILL NOT BE GIVEN. If an item is not covered by this bulletin or there are unusual circumstances that support additional expense, you may submit complete information to justify the additional expense with the Claim Under Loan Guaranty and request reimbursement at that time. The holder is responsible for measures needed to protect and preserve the security for the loan. The decision as to what action to take to preserve and protect property is the holder’s decision, and it is independent of the amount of costs that VA will reimburse.

4.  ALLOWANCES: For vacant and abandoned properties, VA will reimburse the lender for reasonable amounts paid for the following services without obtaining prior approval:

     A.  WINTERIZING AND/OR SERVICING PLUMBING SYSTEMS: This is to include turning off the water supply at the meter or disconnecting the service; draining the pipes and water heater; and during the period between October 1 and April 1, installing antifreeze or similar material in toilet bowls and traps to prevent damage caused by freezing. A reasonable fee for this service is:

For Service Between October 1 and April 1 $55
For Service Between April 1 and October 1 $30

     B.  SECURING THE PROPERTY: If the main entry door cannot be secured with the existing lockset, the lock should be replaced with a VA-approved "Master Lockset." Other exterior doors should be secured from within using available locks, or if required, by other appropriate methods such as bracing, blocking or nailing. Care should be taken not to deface or damage interior walls, floors and trim.

A reasonable charge for this service (including lock) is $60

     C.  HAZARDOUS CONDITIONS: Properties posing a health or personal hazard must be secured to prevent bodily injury to authorized and unauthorized persons who may enter the property. Prompt action is required to remove health or injury hazards and to preserve the bone structure of the security. The following are considered reasonable charges for the services indicated:

         (1)  Boarding Up Window and Door Openings: Normally, windows and doors should not be boarded up unless the glass is missing or the unit is otherwise damaged beyond use. The following amounts are considered reasonable charges for the work indicated:

Single (standard size) windows $50
Double (standard size) windows $55
Picture windows/sliding glass doors $80
Standard size doors $65
Double doors $80
Garage doors (each) $65
Half windows/air conditioner openings $30

         (2)  Trash and Debris Removal From Interior: Any food, garbage or trash posing a health or other hazard (fire) found on the premises, is to be removed and hauled away. Broom cleaning the interior is normally sufficient to satisfy this requirement.
A reasonable charge for this service is $150

         (3)  Yard Service: Yard maintenance should be performed at least every two weeks between April and October; and at least once per month during the other months. Remove all trash and debris and cut all yard areas. Rear yard is to be cut at least 100' behind structure. Haul away grass clippings. Reasonable costs for this service are:
First cutting $100
Subsequent cuttings $50

         (4)  Swimming Pools: In ground pools are to be covered with metal wire adequately secured to prevent entry into the pool. Entry gates are to be locked and damaged security fences are to be repaired to prevent access to the pool area. Pools are to have sufficient water to ensure that proper pressure is maintained to prevent cracking and failure to the bottom or side walls. Above-ground pools are to be drained and removed if not surrounded by a deck. The following amounts are considered reasonable costs for these services for average size pools:

Securing Gates and Security Fence $45
Covering In ground Pool with Wire $800-$900
Draining & Removing Above Ground Pool Without Deck $150
Draining & Covering Above Ground Pool With Deck $200

5.  REIMBURSEMENT: Holders will be reimbursed via the Claim Under Loan Guaranty for property inspections and preservation costs incurred before the interest cutoff date and before custody of the property is delivered to VA up to the limits specified above when the prescribed guidelines are followed. Evidence of payment must be submitted with the Claim Under Loan Guaranty and must describe the service provided, materials used and specify the date the service was performed.

6.  ABANDONED PROPERTY: 38 CFR 36.4346(i)(2) requires that in cases where the loan is more than 30 days delinquent and the property is abandoned, the holder must take appropriate action to protect the property from vandalism and the elements. Within 15 days after confirming abandonment, the holder must report the abandonment to the Secretary and immediately initiate appropriate action to terminate the loan (38 CFR 36.4317(a)).

7.  RESCISSION: This bulletin rescinds Loan Guaranty Bulletin 263-04-09.


Loan Guaranty Officer Signature Block
THOMAS H. BUFFTON, JR.
Loan Guaranty Officer