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Invoice notes and terms example for Nonprofit

[Applause] [Music] [Music] [Music] yeah [Music] [Music] [Music] he [Music] [Applause] [Music] okay we're going to get started uh thank you again I'm John Lucy from the asset sales office and a couple little items um we still have time to collect cards if you have any questions for our session after this we only got a few yesterday but we'll take questions orally as well and uh also the evaluation forms so if anybody has evaluation forms they want turn in uh please do that as well and this first morning session is going to be with marleene Robinson from asset sales and galani house from noad Consulting on post sale and post sale reporting so the two of them we're going to start thanks good morning good morning morning again I'm Marlene Robinson in the ass from the asset sales office this is galani house with no novad Consulting novad Consulting is our program financial advisor and galani is a project manager with novad Consulting and also the person on the novad team who leads the um review and Analysis of the postale data that we get back from purchasers so my role in the post sale process is I oversee it from the asset sales office making sure that I communicate back to the purchasers um any changes about post sale reports what the requirements are and um trying to make sure we get all those reports when they're due we turn it over once we get them to novad and they really do the um heavy lifting in terms of analyzing the data and getting down into the weeds of the data um the requirement for postale reporting is very very important um for transparency we have to report back to our leadership what's going on with the program as well as they report back out to the public so it's very important that um we get the information back from the purchasers what you're required to report and when you're report is in your CAA agreement and that's the conveyance assignment and assumption agreement that's you as the purchasers agreement between you and HUD and so um on slide I believe it's okay uh 91 two on my slides um in section 209 and exhibit B1 of the post sale report I mean of the CAA is where you'll find what's required because I think for each sale the initial due date for the first report is in the CAA and then the schedule for all the reports thereafter um is in there as well so you should check the CAA um and the it it's reporting is so important to us that the purchasers should start thinking about reporting as soon as they know that they are the winning bidder begin to set up your infrastructure so you can gather over time over the quarter all that data so when it's time to send it to us we get it when um it's due um now uh uh next slide please okay so we also provide training for um purchasers okay little glitch here take off the badge thank you we also provide training for purchasers on postale so um today we're not going to go like deep into the Weeds on postale reporting galani is going to do that a little bit but not to a great extent because when you become a winning bidder we can train you and walk you through the um the database what we're trying to collect when we need it so once you find out that you're winning better we can set something up right away and we can do it by phone you know it's something that you don't necessarily have to come in for but we have done formal training for all purchasers and so should we make any major changes we'll send out something for training for everyone um I think we're trying to move more in towards Automation and so that's something that I know galan's team is working on so when that happens that maybe a different way that you'll have to upload the report and in that instance we would send something out and have training for everyone um um okay what is post requirements okay so postale report has evolved over time I just want to say something about um the schedule before I get into that uh right now the schedule is quarterly so if you could put up slide um um yeah that slide thank you um PRI prior we used to um you used to purchases used to report twice a year and different purchasers had different due dates and it just became kind of crazy so now we have a standardized schedule as you see on the board so your due dates to us are July 1 October 1 January 1 and April 1 um of each year and you're reporting on a 3mon uh performance uh period this January 2nd um we had about 85% compliance right off the bat meaning that 85% of the purchasers submitted a post sale report on time and so it usually takes us like about maybe almost a month to get it up to 100% compliance and that's too much time on our end um meaning we have we email the purchasers usually a week before the report is due I'll send out an email saying you know your postale report is due friendly reminder and then if I don't have it say January 3rd or 4th when we go through you'll get another email um if we get it and there's something wrong we send an email out saying we got it but this was missing or please provide this update um but we are trying we're going to cut down on that one month time because it eats into our time to analyze the data and get the results up to our management so we've spoken to our senior leadership and you right now there's no like real penalty penalty what happens is if a purchaser um is hasn't given us the reports timely or hasn't is missing a report and now they want to be bid in a sale I'll say to them okay you're otherwise qualified to bid um we'll let them into the due diligence but they won't be able to place a bid on bid day until they become compliant but our management has indicated that we need to do something different than that to try to drive that we need to have uh those reports um trying to get up to 100% compliance on due date even if we something is wrong with the report we really want to get to that point where we have all of them we can always reach back out to the purchaser and say this is the issue this is how we fix it and move forward but we really are trying to get to the point where um we get all of the data when we need the data so I just want to drive that point home um having this schedule really helps us to manage it it helps us we report out quarterly to our senior leadership and they are going to be reporting out by anually in a public piece that goes out to the public um on what's going on with this and as you can tell this is a a big program a lot of not to there a lot of eyes on it and so it's very important for us to let um everyone know what is the status of these notes and what's going on with them so with that oh penalties I said there was no real penalty before um I guess specifically for for feeling to meet your NSL requirements oh yes that's that's these are the penalties there I was like there were penalties for not giving the reports no they're penalties if you don't meet your NSO requirements so this is another reason why reporting is so important because that's the only way that we know whether or not you're meeting those Ino requirements you have to report that back to us if you don't tell us we don't know and as you can see from what's on the board there are uh liquidated damages for Ino um uh uh disposition in an excess of non- NSO thresholds so uh uh I'm not going to go through all the damages because you can read that but just know that there's some pretty stiff penalties if you don't meet those NSO outcomes uh if you're an NSO purchaser and um you know the only way for us to know is uh is for you to report back to us if you have any questions uh later on about uh what's on the penalty slide or you want to call up you know you can always ask but um that's pretty much you know right the NSO penalties um it's something that we monitor when you when we receive reports from purchasers we will um uh look at sort of the percentages of the loans that have uh met a final NSO outcome and based on that we'll know whether or not we should be reaching out to individual purchasers and asking them or and sort of counseling them through uh uh and making sure that they they're aware of these penalties so that you know we we don't actually have to take any of these actions so this is really a critical component this is a a critical driver of why you know this session itself is so important important for us um and let me just say one more thing all all purchasers report back to us not just the NSO purchasers so all purchasers report and the reporting period is over a 48th month period um so uh but the NSO purchasers are the purchasers who have um outcome requirements that they have to meet so that's important for us to know that but uh other purchasers even the national purchasers report back to us on the status of every note they purchase and starting with um the most recent sale they also have to report back on any notes that they resell in a whole loan sale of their own so if they buy from us and they sell it out to someone else they still have to report back to us on the status um it's just that they don't have any outcome that that they have to meet other than that six-month uh no foreclosure uh time frame in the very beginning yes experienc not yet um to dat no but again a lot of the the uh compliance periods are between three and four years depending upon you know which which sale we're talking about back in 20123 which was the first uh larger dasp transaction our um compliance periods were three years that three years is yet to to be over so the none of these penalties would sort of apply yet but um because some of the outcomes like for instance if you're in a arota rental in order for you to get a credit you have to have it in rental status for three years and so we wouldn't know whether or not you didn't meet that outcome until almost the end right so a lot of purchasers will uh maintain a lot of um Assets in a planned or um interim status so um as long as that as they remain in those um categories then they're not technically um out of compliance and so um so yeah just today it it hasn't appli but that's a good question because it's important for the purchasers internally to track what they're doing and to know that I might have something in a planed status but are you really going to be able to meet it because if you miss um those if you don't meet those statuses that you could at the very end find out that you're in a penalty situation because you didn't meet the 50% and you don't know till you're getting close to the end so it's very important to track what's going on in terms of those NSO outcomes um with those assets right so just as a last point on this slide I think um you know for this session which is really about nonprofits um an important Point here is that we we monitor we're obviously monitoring um people's NSL resolution rates um um and outcome rates um and I think when when purchasers are having trouble one of the potential options would be uh Partnerships with nonprofits particularly nonprofits that um our NSP grantees because as as many of you know that is a sort of um accepted uh NSO outcome right now um so I think that's a potential opportunity for partnership um moving on okay so in terms of General reporting instructions and requirements uh basically what we ask is um for an Excel um file on a quarterly basis that includes loan by loan status data on the portfolio it includes um uh reason for foreclosure data as was mentioned yesterday um in the session uh one of the uh features of the program is that there's a six-month uh foreclosure avoidance period uh during which there are certain um scenarios that uh foreclosure would be allowed allowed um those would have to be reported in this section right um of your reporting uh we also require a summary table from purchasers if they are NSO uh if they're NSO purchasers and that would just sort of report on what percentages of your loans um are in each of the NSO categories so if you have um x% um in uh sale to uh an owner occupant you'd report Ed in this table um so all of that would be uh included in an Excel worksheet that you'd sent to us in addition there are self-certification forms that you'd provide uh and those are typically sent in in PDF format again timeliness is important because in order for us to uh report out to stakeholders Senior Management and taxpayers really um we need all of this information in time so that we can process it and really uh do some analysis uh and in in some cases reach back out to purchasers to uh to resolve any sort of completeness or data quality issues um so it how do we Define report complete completeness well have you submitted everything did you provide us the PDF PDFs we need did you provide all of the uh data elements we need from statuses to uh to Performance categories um additionally and this has become more and more important as the portfolio has has expanded and we we're managing more and more data it's a a a huge burden to go back to old files right um so what we like to ask purchasers to do at this point is to send loan by loan State status data uh from previous periods um in every report right so if you've reported if you purchased loans in 20142 uh for every reporting period you would provide every single report that you uh had submitted to date on a given pool right um in addition we also would ask for the same thing for the uh reason for foreclosure data just because again from a data management standpoint it helps HUD and and and us um to uh properly analyze the data um on time so the format I've sort of already discussed this we require an Excel uh an Excel piece as well as um uh two PDF format forms the naming conventions are actually oddly important to us we we ask all purchasers to sort of uh provide the data uh with this name and Convention and uh to submit it to uh asset sales at hud.gov and you can also copy me on anything you send the reason I like that is because if it gets we get a lot of mail coming into that asset mail mailbox so if I'm copied as well that I'm aware that it probably hit the mailbox already or at least I have a copy in my mailbox so just that you know it also went to me so if you want to copy me that's fine right um and right so so Marlene really is the point of contact on HUD side and what's very helpful to us so that we can if need be reach back out to purchasers um if you provide sort of a point of contact UM particularly if that person is someone other than the the um person submitting the that's a very good point about that because sometimes we have like a point of contact who's like a principal person but they're not the person doing the uh involved in like keeping track of the data and sending in the report and so we we might be communicating with that person but what we're trying to communicate might not be getting across so it's important that purchasers at least let us know who's the person to talk to in your shop about these reports who'll be gathering the data who can if Galan and I have to get on the phone with someone that's the person because a lot of times that's not the principal person who's a contact name that I have so um that's very very important right and um any information you can Pro provide in terms of email addresses and and uh phone numbers is something changes you sent it to me Marlene this is the person and we'll make sure I update that in our um in our database of contacts and the way it works is you purchasers don't directly interact with galani he's not going to be emailing you directly you send it to us I communicate with him and then if there are some issues we'll set up a call with me on the call uh the PFA galani is on the call occasionally I might say yeah go ahead and send it to them you know to him and he would copy me but generally speaking HUD is at the Forefront of this and takes the lead and then he's there with us to resolve issues and what have you or or anybody on your side of the shop right and as a final note on this slide um sort of everything that we're telling you here is sort if is subject to change particularly in the near- term as we're working on some automation that will I think improve our data quality on this side um and and uh will make the process a lot easier for purchasers that are trying to submit data um so look forward to um uh training coming up sort of in the in the future here so the reporting templates what we do what we have been able to do is is create data templates um that just sort of standardize what you you all are submitting and what we expect to see from you all um i' I've mentioned that those those are um an Excel piece and then we provide Word files that you'd then uh PDF and and submit to us okay so a lot of these slides um discuss some of the changes that have taken place in recent months but I think actually for this session where a lot of PCH a lot of the the folks in attendants aren't necessarily previous purchasers uh and those that are probably are aware of the changes that have taken place with the reporting it it it may be something that I can skip now um this slide here shows you sort of the uh individual uh the information that we provide to purchasers in terms of what are acceptable uh responses for uh different uh data categories we provide this in a um data dictionary within the data templates that we sent to you so this is this is information that you will have in the event that reporting becomes a require requirement for you this is uh the same information sort of continued you'll see that we require performance categories we're really interested in loan mods um as I think many of you are also um we we request mod dates we we're interested in the types of mods you all are doing um if there are principle WR write Downs we'd like to know sort of what the uh the amount there is and then so there are some differences in the NSO reporting that we require we uh there are three columns in the template that that you'll receive as purchasers we we're interested in the NSO category so in what is the current status category with respect to uh the neighborhood stabilization outcome for a given loan right uh we're we're interested in what the the initial date of your NSO is we actually want to know when you were able to achieve a a final NSO outcome right and then we'd like for you to indicate if a loan was ever sort of marketed as as Aro which kind of exempts it from ever being considered a final NSL um neighborhood stabilizing outcome so then obviously we also require the uh NSO summary table um which provides this kind of information uh uh There are 16 total categories the first seven are what we consider final nsos so that's uh uh mortgage loan reperformance I believe uh in order to qualify for this a loan a loan shouldn't be reported as a final NSO until a loan has reperform for at least 6 months um so final means you've achieved whatever the outcome is it's done it's rep performed for six months so now it's final I think might be important to to Define what we mean by final planned sure so I think as Marlene saying any loan that be that is reported in a given reporting period as a final NSO outcome it should be sort of a a static thing right um it that that loan should never sort of uh move back into planned NSO or interim status or or otherwise um planned nsos on the other hand and we anticipate that some of those loans don't actually end up uh becoming final nsos it's just sort of the the um the approach that the servicer is currently taking on the loan and and um uh but you know ideally all of those loans become final nsos right so just to show the last couple categories um we have an interim status which is like usually there's High volumes in interim status in the first report reporting period um but then gradually less and less loans would be reported um as such and then for any non NSO outcome um this would be like a a foreclosure that that a foreclosure or or any anything else that that doesn't sort of apply under the the first seven um NSO outcomes would be uh reported as uh a number 16 uh I think it's it's probably worthwhile to say that um one of the NSO outcome categories is number seven which is uh disposition in ance with eligible program um I think this is this is something that a lot of purchasers don't necessarily understand basically if you have an idea about what you might want to do with with a given loone um that you believe achieves a neighborhood stabilization outcome you would apply directly to HUD s send um an application to uh uh John Lucy and the folks at the at the asset Sals office requesting a a waiver or um an exception an exception um and it would then in future reporting periods be reported as a uh final NSO number seven for example if you sent us a request like I'll use this as an example cuz uh people have asked about that if under NSO number 7even which is the purchaser can um propose an NSO outcome that they think meets neighborhood stabilization so if a purchaser says I want to sell a certain number of notes to a nonprofit and the nonprofit is going to be doing this they would send us um a proposal uh so to speak very it's somewhat formal process for us to review and so that's what Galan is talking about um if we agree and HUD says okay yes we'll make this exception you can purchaser can move forward execute this sale the purchaser will then have to report back to us on the status of those loans they've sold to the nonprofit what's going on with them and they would report that back under um that final in AO category that galani is talking about when if the nonprofit is going to be um modifying those loan even though it's a mod it still coming in under that final NSO number 7 so we're tracking the exceptions that we gave and what happened under those exceptions with the notes did did the purchaser um achieve the goals that they said in what they proposed to us is really what we're trying to get to right and so there's two two other points that I'd like to make about all this data that we're asking for right number one this this information is private information so if you provide to us um there's been a slew of people that have requested data from the asset sales office and the only information that ever that that ever does leave is um information that's not uh private information um so so we consider this information private um additionally um it's important to note that any NS any sort of nonprofit uh uh partnership that leads to a nonprofit taking over loans um those loans the the reporting requirements follow those loans so we would still request that uh the purchasers report on these loans um because it's still very important to us to understand what's happening to them so uh so just to get sort of a a view of of what our NSO summary table looks like this is what it looks like very simple to to uh to put together we request counts and uh percents of total this is sort of an example of what our reason for foreclosure data looks like what we're asking for and again we would like this to be reported forward in in every report um you just sort of provide whatever the reason is it can it's usually vacancy but if there's other something else you'd provide just a a narrative explanation of what it what it was and then we this is kind of uh an example of some of the information we provide in our training we provide quality control protocols that we we recommend uh uh purchasers use in order to sort of avoid any completeness or compliance issues uh going forward which as Marlene mentioned can sort of result in uh a barring from from uh participation in future sales so I think it's really important that people kind of uh employ some quality control protocols um and so really this this touches on the certifications there are different uh self-certification forms uh depending upon the kind of purchaser whether it's a national or NSO purchaser um and so we require a service or eligibility uh certification for the national and NSO sales but we only require the asset management um eligibility for um NSO sales so uh that's something to keep in mind and then uh we also require the Foreclosure avoidance for uh National and NSO sales so that really concludes information we we wanted to give you guys on on the the reporting side and we can take any questions now that you may have about reporting if a purchaser sells to a nonprofit and it's deemed an NSO outcome or if a nonprofit purchases REO which is not an NSO outcome does the nonprofit inherit the reporting requirements or does the original purchaser still have reporting requirements I how does that the original purchaser would still have to report to us cuz your agreement to purchase is between you and the purchaser not not us we we are we agree to what the purchaser has proposed so the purchaser would probably um put some reporting requirements on you so you could report to them so they can report to us okay in either case so but if you purchase on your own then you would have a CAA with HUD and your CAA would have your reporting requirements in it right as a non profit so you'd be submitting reports directly to us if you purchased it let's say a purchaser proposed to us uh under Ino number seven that they want to do an alternative and the alternative is to sell to a nonprofit uh that purchaser is still going to have to report to us on their report that they send us what happens with these loan it's not just I sold it to a nonprofit and that's it I'm done they still have to tell us what the status of these loans are for the remainder of the time got yes thank you yes in in a situation like that do you guys take into consideration when looking at the results the type or the the slice of the portfolio that's being sold so for example if the nonprofit bids on a on a chunk of notes and these notes uh were say the bottom of the barrel all slated for foreclosure no contact for 24 months or V or borrowers deceased when we report back how do and you know the majority goes are you saying these this is an NSO sale and you found out after purchase that the majority of these notes CU you would know when you're going through the diligence you'd be able to see what's um vacant and what have you but you're saying that you you had a lot of vacancy and then you weren't able to convert it back to to NSO outcomes or uh no so in the scenario you were just talking about where an an NSO buyer sells a pull of notes to a nonprofit uhhuh and okay that in that yeah as an NSO outcome and the nonprofit reviews the notes and and agrees on a price knowing the fact that uh it was a selected probably negative select slice of the portfolio that high probability that most of it will have to go to real estate for an NSO type outcome how do you measure that purchaser is still required to meet 50% NSO so that 50% requirement is on our purchaser not on you who purchased from them and so but when they complete the sale do they get an NSO credit no not for just completing the sale to you but they still have to report outcomes on all the notes they purchase and we're looking to see that 50% of those notes met a final NSO outcome it could be through a purchase to you that they meet that outcome meaning you purchase from them and let's say say you modified that note or you uh did a arota rental and you kept it in rental for the time period or you I don't know you um did a short sale or whatever the nonprofit did with it as long as it met an NSO outcome that purchaser can get credit for that outcome through you whatever the agreement they have with you I I think that the the from our standpoint the loan meets an NS meets the NSO requirement when it meets the NSO requirement your your relationship with the the original buyer it's the the point really is that it's it's of no sort of consequence like right unless that transaction itself represents an NSO outcome which like if they if they Grant it to an NSP grantee right um or sell to an NSP grantee that actually in in itself applies as a um as an NSO outome after which point it would be a final NSO and that would be again a static thing right but NSP then the there there's no need for that continuing report because well they would continue to report that it met the final in all the future reports they send us until the reporting period ends but that it NSP subgrantee would they still have to meet that 50% requirement okay I think it's just a little bit of a confusion so okay so let's say you have an entire like 100 loans right um 30 of them you were able to achieve an NSO outcome via uh deed and lose sale to owner occupant another 20 you identified an NSP grantee who could take those off your hands right then you would meet your uh NSO out outcome requirement yeah and that will be final but when but in order Okay so NSP grantee though it's not like automatic you don't just say identify and you do it you still have to send something to HUD saying this is the NSP grantee and I'm going to you know sell these notes to this NSP grantee so we can make sure that that really is an NSP grantee and do our due diligence in our side but once that's done you can claim a final NSO for that yes okay and so and but getting back to your point is if you buy notes from our purchaser our purchaser still has to report back back to us now if those notes that they sold to you ended up with the NSP grantee our purchaser can report to us a final NSO for that that makes sense yes let's say have a note that foreclosure can you sell the REO it's not a note anymore it's an REO can you sell that to an NSP grantee and have that then can that sort of wash out the closure as a nonso I believe that's yes I I I believe the answer to that is yes but I'd like to sort of uh reserve the right to check that to revise the answer I believe the answer is is yes and so that that actually represents like one of two ways in which a foreclosure can still will uh be considered an NSO outcome also um if it's held for for rental as I think it I think one of the panelists yesterday said that's one of their sort of preferred uh resol resolution approaches um so yeah those are the two ways yeah so under the current guidelines those are only two ways that REO could get credit for um an NSO outcome and of course if anything changes with respect to NSO outcomes or what is Hud's doing we'll definitely communicate that out and set up purchaser training and inform you of you know how that affects the reporting and what the impact of the changes are and what we want you to do well thank you all very much for your attention this morning I didn't think this would be so interesting but everybody was like thank you [Applause] okay so we don't have a a break schedule we're kind of just on time for the 9:45 um we're going to have the asset sales team are all going to join us up here for the Q&A and debrief so give us a couple seconds to get some folks in here thanks [Music] [Music] [Music] [Music]