RPSC Final Questions VA798-11-RP-0148 1. Will a redacted version of an invoice be provided?

RESPONSE: No, VA will not provide a redacted invoice. VA requires all REO invoices to be submitted electronically for payment. VA requires line item details for each loan/REO detailing service, date of service, who performed service and amounts. VA requires contractor to retain all supporting documents for invoices going back to the persons/companies that completed the service. VA requires full access to all supporting documents. VA is also modifying some of its current procedures and final invoice requirements will be provided upon award. 2. On page 11, 1.7.9,10,11 requirements are defined that indicate they only apply to Portfolio Loans. How are the portfolio loans distinguished from the other loans? RESPONSE: Portfolio loans describe the entire group of loans being serviced for VA, and include all loan types mentioned in the PWS. The reason some of the cited items in the RFP state that they apply only to loans is to clarify that they do not apply to REO properties managed under the RFP. 3. Page 12, PWS Section 4.3 Travel: States contractor shall bear expense of all travel. Is this for both VA travel expenses for Contractor site visits, as well as Contractor's travel expenses? RESPONSE: No, the contractor will not have to cover VAs travel expenses. 4. Page 20. Section 6.3.2 b: States "Contractor will reimburse VA for losses due to unjustified delays ..." Please clarify what are "unjustified delays" RESPONSE: An unjustified delay is one where the contractor cannot document an appropriate and legitimate business or legal reason for the delay. For example, the contractor failed to timely initiate foreclosure proceedings or begin eviction proceedings. Another example is a foreclosure action that took 12 months longer than the FNMA guidelines, and no justification exists, such as a contested foreclosure or a bankruptcy. The possible instances are not restricted to the aforementioned examples. 5. Section 6.3.3: States that Contractor is responsible to the VA ..."for costs due to Contractor negligence as defined by VA, including but not limited to, damages due to failure to secure or maintain property, tax penalties, etc." Please further define "Contractor negligence" (expand on etc.). RESPONSE: Contractor negligence is any verified instance of the contractor failing to take an appropriate action to protect the interests of the Secretary

where the contractor was aware, or should have been aware, of the circumstance that led to the loss. One example, although by no means the only one, would be if the contractor has to reforeclose on a loan because they failed up to pick up a lien on the first foreclosure. 6. Page 25 Section 6.4.5.7: States that "Contractor shall maintain an updated list of habitable properties, as defined by the VA that could potentially be used as rentals." Please provide more details regarding this "as defined" provision. RESPONSE: VA participates in national disaster planning both internally and with FEMA. It is very rare, but not impossible, that in the event of a major disaster, VA might have to enter into temporary rentals with disaster survivors. Because of this, VA needs the contractor to regularly track those properties that are considered habitable in their present condition. Habitable is generally described as properties that are in move-in condition or could easily be brought into movein condition. More details will be provided upon award. 7. Page 26 Section 6.4.12: States " Sell to VA - approved homeless providers at discounts." Need parameters regarding this VA requirement such as the list of providers, volume and discount requirements, etc.

RESPONSE: VA will provide specifics regarding the active provider list shortly after contract award. The volume has been very low, averaging three or fewer annually over the life of the current contract, however, the Secretary has made reduction of veteran homelessness a priority and Loan Guaranty anticipates an increase in volume over the short term. Discount requirements are detailed in VA circular 26-93-20. 8. Is there another schedule other than VA Directive 6300 which describes both the retention policy as well as storage type requirements (electronic or physical) for servicing, reo, etc. documents? If not, can you site the specific section of this document that we need to adhere to? RESPONSE: No, there is not another schedule. Records Control Schedule Part I Section XII describes Loan Guaranty Records. The records that the winning contractor will need to retain are described in Items:
12062.300; 12.080.200; 12100.200; 12110.100; 12.110.300; 12110.320; 12110.321; 12110.330; 12110.340; 12110.350; 12110.360; 12111.000; 12111.100; 12111.200; 12114.000; 12114.300; 12114.400; 12115.000; 12117.000; 12118.000; 12119.000; 12170000; 12170.210; 12170.211; 12170212; 12170200; 12170.310.

It is also important to note that the Records Control Schedule that VA is using was written in 1997. It is in the process of being revised to accommodate electronic records and to hopefully streamline the requirements.

9. Section B.2.5.7.7 indicates that a SAS70 is required. Is it required of just the prime or does the requirement extend to all sub-contractors or all companies which store NPI data? RESPONSE: The requirements of any contract flow from the prime to the subcontractors. Therefore, the prime can require their subs to follow SAS 70 standards. 10. The SF1449 specifies the NAICS code for this solicitation as 531311 (Residential Property Managers). Given the diverse scope of work within the PWS, will subcontractors within other NAICS codes be acceptable to the government. Specifically, small businesses supporting NAICS codes: 531390 Other Activities related to Real Estate; 523920 Portfolio Management; 522310 Mortgage Loan Brokers; or 541611 Administrative Management). RESPONSE: The prime contractor must have NAICS 531311. The subcontractors are not required to have this NAICS. 11. Please clarify your response to Question 80 from Amendment #5: Will the government make payment for loan servicing fees on delinquent loans which accrued during the period from last homeowner payment until the loan is either foreclosed, modified reinstated or paid off? RESPONSE: VA does not understand what requires clarification. Also see the response to question #14. 12. Attachment A shows the maximum allowances for the various property management expenses allowable for the initial maintenance needs and recurring maintenance needs of a property. Not all properties require all services. It is common to charge a management fee to administer to all of these property needs with the actual expenses incurred "on the property" to be reimbursed to the contractor as "pass-through" expenses. However, D.8 Attachment H calls for a "Property Preservation Flat Fee" and our pricing structure is to be a "Fixed Flat Fee" for all of the services listed in Attachment H. Many of these services are also listed in Attachment A although it is not an exact match. Are we to assume that for the listed services in Attachment H that there is no reimbursement to the contractor and that the contractor only gets the Property Preservation Fixed Flat Fee? Is this pricing to be presented in CLIN 0001? If there are no pass thru reimbursements for the listed expenses in Attachment H, are we permitted to include a management fee in the "Fixed Flat Fee" also in CLIN 0001? RESPONSE: Attachment A contains a reference to VA Circular 26-09-12. This circular contains a schedule of maximum allowable fees for Property Preservation costs on a loan within the VA portfolio. The contractor cannot

exceed the costs on this schedule without providing appropriate documentation and obtaining prior approval from VA. Attachment H is for REO properties only, and does not apply to portfolio loans. For the listed services in Attachment H, the only reimbursement the contractor would receive is the Property Preservation Fixed Flat Fee. The pricing for the Property Preservation Flat Fee is to be presented in CLIN 0001. Fees for the marketing and management of REO properties are to be presented in CLIN 0002. 13. Are expenses not listed in Attachment A or Attachment H reimbursed with proper VA approvals? RESPONSE: Yes 14. E.15. #6. Volume IV PRICE. This section requires Total annual cost in basis points for Loan Servicing (Performing and Non-Performing Loans). Please clarify what this means. RESPONSE: It is typical in the mortgage servicing industry to charge the investor using basis points. Instead of pricing in terms of gross dollars, basis point (bp) pricing would be based on a percentage of principal balances outstanding, e.g., xxbp, or .00xx. Performing Loan: Servicing fee is collected for each full monthly installment of PITI applied during the billing period. Basis point factor to be applied to unpaid principal balance at application of each full monthly installment of PITI. Non-performing Loan: Servicing fee is payable after month in which loan is terminated, paid off or reinstated. Basis point factor to be applied to unpaid principal balance, payable for number of unpaid installments of PITI at termination (or payoff or reinstatement) from the later of (1) contract performance start date or (2) date of first uncured default. 15. Amendment 003, Question #11., Page 5 of 6. The answer to this question says that the legal costs of the eviction and the management and oversight of the eviction process by the Contractor should not be included in the fixed flat P & P fee. If that is so: a. Are the legal expenses a pass through cost? b. How does the Contractor get compensated for managing the eviction process? RESPONSE: The legal expenses are a pass through cost provided they are reasonable and appropriate documentation exists to support them. The costs to the contractor for managing the eviction process should be included in the marketing and management fee for REO properties.

16. What electronic and paper files on the REO will be transferred and received? In what form electronically; i.e., will the contractor have access to BofAs Equator records? RESPONSE: VA will transfer data on the REO inventory electronically to the new contractor. Physical files will be limited to title packages/abstracts. The new contractor will not have direct access to Bank of Americas 3rd party system. All details of the transition will be provided shortly after the award to the contractor including what data will be provided from the departing contractor. 17. Evidence of the $30 million available capital is required with the proposal. What form of evidence is acceptable to the VA? RESPONSE: VA requires that each offeror provide a letter from a bank indicating it has a line of credit of at minimum $30 million dollars. 18. May teaming firms each supply evidence of the capital separately in proportion to each ones participation with the proposal, so long as the total equals at least $30 million? For example, the prime has $20 million and a substantial, well-funded servicing firm has $10 million. Is that acceptable? RESPONSE: No. The prime contractor must be able to demonstrate this capability. 19. Does the VA want to see the collaborative agreement document executed by and between teaming firms included with the proposal? If so, may it be an exhibit or attachment to the proposal that does not count in the page limitation? RESPONSE: It should be attached to the proposal. It will not count against the page count. 20. We understand that the VA pays invoices for PWS services promptly so long as the invoices are acceptable in form and content when received. Is there a VA accounts payable tracking system to provide status updates that the contractor can access? This would give the contractor the ability to check electronic updates to ascertain that the invoice has been received and approved (or rejected for corrections), and is in line for payment, avoiding the need to call the VA for status information. RESPONSE: No, VA does not currently have a payment tracking system that can be used for this contract. VA will work with the contractor, upon award, to develop a method of electronic invoice payment, and such method could include tracking capability. 21. Will the VA issue a transition CLIN for the respondents to price separately? If not, are we to price the transition properties the same as if they are new acquisitions?

RESPONSE: No, VA will not issue a transition CLIN. Yes, transition properties should be priced the same as if they were new acquisitions, however VA encourages discounted pricing and creativity in this regard. 22. PWS Section 5.5.5. Foreclosures: Does the liquidation appraisal required in section 5.5.5, at #6 create a Notice of Value? RESPONSE: The servicer will need to have one or two staff qualify as Staff Appraisal Reviewers (SAR). The SAR reviews the completed appraisal and creates the actual Notices of Value for pre-foreclosure appraisals on portfolio loans. . 23. PWS Section 5.4.6. Marketing and Selling Property, at #2, states: Conduct market analysis for each property and obtain an initial market value property appraisal upon assignment, conducted by a licensed or certified appraiser from the propertys local market which meets the requirements of Federally related transactions; Is it the intention of this requirement to wave the need for a Notice of Value on the property? RESPONSE: A Notice of Value is not required. The contractor is required to engage the services of a licensed/certified appraiser to obtain a current property appraisal sufficient to assist in determining the initial fair market value. 24. PWS Section 1.5. REO and Portfolio Servicing Profile and Data, Table 1 provides the number of VA acquired properties that sold as of 3/1/11. On what date does this table start and what is the period of time during which the listed Number of Sales were made (e.g. 12 months, two years)? RESPONSE: Oct 1, 2008 through January 2011. 25. PWS Section 5.4.3 Redemption Processing. What is the historical redemption percentage of VA properties after conveyance and what is the average annual, quarterly or monthly volume of VA properties that are subject to redemption processing? RESPONSE: The number of properties that actually redeem has declined significantly over previous years. Since Oct. 2008, 134 properties have been redeemed. State volume of completed redemptions is shown in the table. The number of properties potentially eligible for redemption can be estimated by using the previously provided REO inventory divided by the number of properties located in redemption states.
StateNumberRedeemed(20082011) MI 56

StateNumberRedeemed(20082011) MN KS CO WY NM AL IA 36 18 13 4 3 3 1

26. PWS Section 5.7. Information Management System, at No. 7, states Deliver an annual Statement on Auditing Standards (SAS) 70 report (or its equivalent). What other reports or certifications are considered equivalents to the SAS 70 report (certification), must the report or certification come only from a third party contractor that has proprietary ownership of systems dedicated to the VA contract or can the report come from an independent Certified Public Accountant with knowledge of the systems dedicated to the VA contract, and can the annual cost of the SAS 70 report or its equivalent be charged to the VA as a reimbursable expense? RESPONSE: The Government is unaware of other reports or certification equivalent to the SAS 70. However, if a contractor proposes a different report then the Government will evaluate the report to ensure it is acceptable. The cost of the report is an overhead expense. 30. Can VA provide a copy of the pricing schedule of the current contract performing these services? RESPONSE: The current contract pricing schedule was awarded utilizing a GSA schedule and would not provide any information pertinent to this requirement. 31. Will there be an extension of the October 6th due date for proposals? RESPONSE: The due date for proposals has been extended to October 7, 2011.