1. HUD is reviewing BPOs, appraisal reports, and Automated Valuation Models (AVMs) in order to determine the best market value BPOs are currently being issued with all Initial Inspection work orders for the following counties: – CA: Riverside, San Bernardino New counties added effective 9-23-13: Alameda, Contra Costa, Los Angeles, Orange, Sacramento, San Diego, San Joaquin – WA: King, Pierce, Snohomish New county added effective 9-23-13: Clark Explanation of HUDHomestore’s $0 “As Is” value – On some cases, the initial list price will be higher than the FHA as-is appraised value – Listing disclosure is provided – Overbids: buyer will still be responsible for cash difference of any overbid of appraised value 1 Valuation Review Pilot Program

2. Effective with all new, relisted, and price reduced properties on or after 9-23-13 – Note: this does not apply to Lottery Properties – Does not apply to properties that are currently listed or under contract, unless they get relisted after 9-23-13 This means that any backup offers we are currently holding will continue to be held until property closes or is relisted Applies only to below counties : – CA: Alameda, Contra Costa, Los Angeles, Orange, Riverside, Sacramento, San Bernardino, San Diego, San Joaquin – WA: Clark, King, Pierce, Snohomish Note that this program may expand to other counties in the future 2 Elimination of Backup Offers

3. Backup offers are “an expression of interest” By the time the originally accepted bid cancels and we proceed to the next backup in line, the backup buyer is often not interested anymore Eliminating backups will: – Reduce continuous fallout of non-interested backup bidders – Potentially increase a higher net to HUD – Provide all bidders an opportunity to rebid 3 Why are we eliminating backup bids?

4. Will be featured on HUDHomestore.com and must be added to MLS – Attention bidders, no backup bids will be accepted for this property. This notification supersedes the selection made in your electronic bid placed on HUDHomestore.com as well as line 10 of the 9548 HUD Sales Contract. Due to this policy change it is in the buyer’s best interest to place your Best and Final offer. If the winning bid is canceled the property will be relisted on HUDHomestore.com. Will provide a new MLS addendum with this new backup bid verbiage that must be included in your MLS Note: HUD is NOT making any changes to the HUDHomestore online bid submission form 4 Disclosures

5. To all selling agents that submitted bids: – Attention bidders, we have provisionally accepted another offer on this property. Please be advised that no backup bids will be accepted for this property. This notification supersedes the selection made in your electronic bid placed on HUDHomestore.com as well as line 10 of the 9548 HUD Sales Contract. If the winning bid is canceled the property will be relisted on HUDHomestore.com. 5 Email Notification – Bid Acceptance

6. Recipient clarification: – The first time the property is listed and a bid is accepted, the notice goes to all other selling agents marked as backups for that property. Then if that bid/contract is cancelled, the property is relisted, and a new bid is accepted, the notice will only go to those who submitted a bid in between that first acceptance and the next acceptance. – For relist properties, the notice only goes to those agents who have submitted a bid marked as a backup since the last acceptance. Note: the notice will be sent from a “send-only” email, so recipients will not receive any response to inquiries directed to the notice sender 6 Email Notification – Bid Acceptance cont.

7. To all selling agents that submitted bids on that property (LLBs will be cc’d on this notice): – Great News! (insert property address) is back on the market! This property is being relisted on (insert date). Your buyer has an opportunity to submit their highest and best offer. Note: the notice will be sent from a “send-only” email, so recipients will not receive any response to inquiries directed to the notice sender 7 Email Notification – Bid/Contract Cancellation