Matt Martin LBP Policy

If the property is Red Flagged due to possible 203B Lead-Based Paint Stabilization:

The LBP Inspection Report which will show if the property has LBP & stabilization is required. A work order has been issued to HUD’s Field Service Manager (Cityside Management Corp, A-Z, or Innotions) for the report & once received, you will be notified. It usually takes 2-3 weeks to obtain the report.

If the LBP Inspection Report states the property is Lead-Free or Stabilization is not required, MMREM will then e-mail you a copy of the LBP Inspection Report & a new LBP Disclose Addendum form for signature. Please have the LBP Disclosure Addendum form signed & sent back to me. Once received, they will remove the Red Flag from the property & e-mail notification to the Closing Agent & Selling Broker.

If the property DOES have deteriorated or hazardous LBP, then the below information applies:

**For FHA 203B & FHA 203B with a Repair Escrow financing, HUD is required to complete the LBP Stabilization prior to settlement. I will then e-mail you a copy of the LBP Inspection Report & a new LBP Disclose Addendum form for signature. Please have the LBP Disclosure Addendum form signed & sent back to me. Meanwhile, HUD’s FSM will order 3 bids for the stabilization. Once the Stabilization work is completed, HUD’s FSM will contact the Testing Company to order Clearance. The Testing Company will go to the property to take swabs & then run tests to determine that the LBP has been Stabilized. If the Dust Test passes the Testing Company will forward the LBP Stabilization Clearance Certification to HUD’s FSM. HUD’s FSM will then forward the Clearance Certification to our office & we will then remove the Red Flag & e-mail notification to the Selling Broker & Closing Agent & attach a copy of the Clearance Certification . Note: If the Dust Tests fail, the property will have to be re-cleaned & re-tested until it passes.

Also Note: Even if the LBP Clearance Certification is received, we cannot remove the Red Flag until the signed LBP Disclosure Addendum form is signed by the Buyer & Selling Broker & sent back to MMREM. Original signatures are not required. It can be faxed to Attn: Cristin Maloney at fax# 267-937-2831 or e-mailed c.maloney@mmrem.com .

**On FHA 203B financed properties, HUD is responsible to pay for the 203B LBP Stabilization & to obtain the Clearance Certification.

-However, if at some point the buyer does an Addendum Modification changing to Cash or Conventional financing, the buyer will be responsible to reimburse HUD for any cost incurred to complete the Stabilization & Clearance Certification.

-Also note, if the buyer cancels their sales contract after the Stabilization work has begun, the Earnest Money Deposit will be forfeit to HUD.

*************************************************************

**The sales contract has been ratified & the LBP Inspection Report has been ordered. Contract processing can take a day or two. If you do not received your Ratified Sales Package by e-mail within the next couple of days, please contact Pam Miller at 888-632-4484 ext. 322 or p.miller@mmrem.com.

-For a copy of the Appraisal & Property Condition Report, please send your request, with a copy of the ratified sales contract, to our Customer Service Department at MMREMPhilly@mmrem.com.

-For a copy of the Termite Report, please e-mail your request to p.miller@mmrem.com.

-For an Addendum Modification to the sales contract, please e-mail your request to p.miller@mmrem.com.

**The Red Flag should not delay the buyer's Home Inspection. The buyer must still continue with their Home Inspections to be completed within the first 15 days from the date the sales contract is signed by HUD. Utility Activation for the buyer’s Home Inspection is dealt with by HUD’s Field Service Manager. You can find a copy of their Utility Activation form & instructions on the FSM’s website.

**If the report comes back & the property does have LBP, then once the LBP Stabilization work has begun, we ask that Buyers/Brokers, to please stay out of the property while the Stabilization & Clearance procedures are taking place. Going into the property stirs the dust & can affect the results of the clearance test, causing the property to fail. If the property fails, the property has to be re-cleaned & re-tested again until it does pass & we receive the clearance.

**HUD must follow FHA guidelines & Federal Regulations for any & all HUD properties with LBP where the buyer is obtaining FHA financing. These procedures cannot be waived by the purchaser.

**Please note: If the cost estimate or bids to stabilize exceed $4000.00, HUD will not perform the LBP Stabilization & Clearance. The Buyer can either 1.) do an Addendum Modification to the sales contract changing to an uninsurable financing or 2.) cancel the sales contract & HUD will refund the Earnest Money Deposit to the Buyer. If the buyer chooses to change the financing to FHA 203K, HUD will credit the buyer $4000.00 to complete the stabilization after settlement & any additional moneys required to complete the Stabilization & Clearance will be the buyer's responsibility & expense. If the buyer chooses to change the financing to Conventional or Cash, FHA LBP procedures are no longer required & it would be at the buyer's decision, responsibility & expense if they wish to remediate the LBP once they settle. If the buyer chooses to cancel the sales contract, the property will be put back on the market & re-listed as uninsurable.

**You will not be given an Expiration Date until either the LBP Inspection Report comes in stating the Stabilization is not required or once the Clearance Certification is received. If, for HUD’s Closing Agent’s in-house records, any Extensions are required while the property is Red Flagged for 203B LBP Stabilization & Clearance, the extension fees will be waived. However, please note, the fee will not be waived if the only reason the Red Flag has not been removed is because MMREM has not yet received the signed updated LBP Disclosure form (when required) back from the buyer.

**Important Reminder: HUD still owns the property until settlement takes place. Per the sales contract, the purchaser is not authorized to make any repairs to the property prior to closing. Nor are they allowed to store any personal items at the property. If buyers are found doing either of these things, HUD will cancel the sales contract & the buyer forfeits their Earnest Money Deposit.