Property Preservation Fees and Costs

This page outlines the fees to be reimbursed for property preservation items under the jurisdiction of the St. Paul Regional Loan Center as follows: Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota, and Wisconsin. It is not our intent to regulate the amounts that holders pay to protect and preserve properties or to decide what measure the holder needs to take to preserve a property.

Appraisal Mileage Fees

The allowable mileage fee is now the fee established annually by the General Services Administration (GSA). Mileage fees will only apply outside of the appraiser’s home county for trips in excess of 75 miles roundtrip. No mileage fees will be allowed within metropolitan areas as defined in RLC Memorandum Number 04-17.

Property Preservation

Under Title 38 36.4320 the holder shall bear responsibility for any loss due to damage or destruction of the property or personal injury sustained in respect to such property from the date of acquisition by the holder due to the date such risk of loss is assumed by the Department of Veterans Affairs.

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Prior Approval

Prior approval is not required and will not be given. The decision as to what action to take to preserve and protect the property is the holder’s, and it is independent of the amount of costs that VA will reimburse.

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.

Security Properties

Windows and doors must be secured to prevent unauthorized entry and to protect against weather damage.
Broken glass should be replaced.
Locks should be changed or re-keyed on all entry doors.

Boarding

Windows and doors should not be boarded unless the glass is broken or the property is located in an area where it will be subject to vandalism.

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Clean Outs and Debris Removal

A holder or servicer should only remove items or materials considered health or safety hazards. Reimbursement for debris removal will be at the rate of $25 per cubic yard. Request for reimbursement of debris removal will require a salvage or dumping fee receipt. The receipt of disposal must include the date, address of the property for which the debris is being dumped, number of yards dumped, and description of items being dumped or disposed.

Sump Pump Replacement

Repalcement of a sump pump to keep the basements or crawl space dry is allowable. However, the maximum reimbursement is $250.00.

Ground and Yard Service

Lawn care should be performed as needed (up to two cuttings per month) to comply with local codes and ordinances. Lawn care should be performed to the edge of the property line on city lots, and mowing should only be done for the first 40 feet from the dwelling on rural lots.
A large city lot is defined as 8,000 sq. ft. or greater.
Snow removal should be performed as needed to comply with local codes and ordinances.

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Winterization of Properties

All vacant properties should be winterized between October 1st and April 1st.
Winterization must include a thorough and complete draining of all plumbing systems (lines should not be cut).

• Domestic Plumbing-the hot water heater and all domestic supply and distribution piping must be thoroughly drained. All faucets and valves must be opened in the process and then be closed after draining is completed. Adequate antifreeze is to be placed in all fixtures and traps including toilet tanks and bowls.
• Hot Water Heating Systems- The heating system should be drained, or as an alternative to draining, VA will accept a 50/50 anti-freeze mixture in the heating system.
• Swimming pools- Feed lines should be winterized, but pools should not be drained.
• Sump pumps- When a sump pump is used to keep basements or crawl space dry, check to make sure the pump is operable to ensure that the property is not damaged by flooding.

Only non-toxic anti-freeze (propylene-glycol) may be used for winterization.
The preservation company must indicate whether utilities (water, electrical, or gas) were in service at the time the property was winterized, and this report should be submitted with the holder’s claim.

Heating

There may be situations where a property should also be heated. If heat is left on, thermostats should be set at 55 degrees.

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Utilities

It is recommended that utilities be turned off since utility costs will not be reimbursed on a claim unless required to protect the property.

Swimming Pools

Follow the guidelines established by The Department of Housing and Urban Development (HUD) for the protection and preservation of swimming pools. Do not drain in-ground pools.
A cover must be installed to prevent access and the fence doors/gates must be padlocked.

Property Inspections

The holder should make an inspection of the mortgaged property whenever the physical condition may be in jeopardy. Unless a repayment agreement is in effect, a property inspection must also be made at the following times:

1. Before the 60th day of delinquency or before initiating action to liquidate a loan, whichever is earlier;
2. At least once each month after liquidation proceedings have been started, unless servicing information shows the property remains owner occupied;
3. In the case of an abandoned property, inspections should be scheduled at least monthly to prevent deterioration due to vandalism or neglect.
4. 4) For Chicago, Illinois, additional property inspections should be completed when the property is located in the following zip code areas:

   60609	60615	60621	60644	60653
   60627	60628	60635	60647
   60636	60639	60641	60651

   To prevent property demolition by the City of Chicago, we allow reimbursement for two inspections per month.

VA should be notified if any substantive damage to the property is found.

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