American Banker Article “A Side Effect of Foreclosure Wave: Real Estate on Books”

Safeguard was mentioned in an article on American Banker regarding REO properties.

A Side Effect of Foreclosure Wave: Real Estate on Books

American Banker? |? Wednesday, January 21, 2009

By Emily Flitter

As Washington continues to debate policy options for reducing foreclosures, banks and servicers are struggling to deal with the glut of homes they are taking over when homeowners cannot make their mortgage payments.

By some estimates, lenders now own 900,000 homes, and the Federal Deposit Insurance Corp. said “real estate owned” at insured institutions rose 21% from a quarter earlier and 134% from a year earlier, to $23 billion at Sept. 30.

Foreclosures now make up a huge chunk of the homes available for sale. The National Association of Realtors said 45% of sales involve foreclosed homes, compared with roughly 10% a year ago.

And lenders have yet to shift the bulk of their supply to the sale market. Rick Sharga, a spokesman for RealtyTrac Inc. said nearly 70% of the foreclosed homes in the firm’s database have not been listed for sale.

“There’s too many foreclosures right now for anybody — including us,” Mr. Sharga said. “The foreclosure problem has dragged the housing market down, which has led to an economic meltdown, and this has affected everybody. If the problem continues to worsen, none of us are going to be in business.”

Alan White, an assistant law professor at Valparaiso University, agreed that the pipeline is huge and “clogged at every step of the way.”

Observers say lenders are so preoccupied with other effects of the housing crisis that they are not focused on preparing homes for resale.

“Banks can’t and don’t have the time or willpower, and it’s hard fixing up homes when you’re managing them from a distance,” said Paul Miller, an analyst at Friedman, Billings, Ramsey & Co. Inc. “The system is not built to deal with this number of foreclosed properties. Even the people they’ve hired to deal don’t have the capacity.”

Potential buyers face a Catch-22 for REO properties, he said — an existing servicer will not perform the necessary repair work, and a new lender will not agree to pay for something that is as uncertain as a house in disrepair.

Ironically, according to Mr. Miller, given the size and complexity of banking operations today, the same bank could be working on both sides of a failing deal. “It could be B of A on both sides of the equation, and the complaints are coming from two different departments.”

Observers said that despite the extensive resources being spent on upkeep, the sheer volume of foreclosed homes is creating holes in property management. Borrowers forced to move have left behind houses in various states of disarray. Problems range from unwashed floors to holes in the wall where appliances once stood. In some neighborhoods, vandals have broken into unwatched houses to steal copper piping, and basements are flooded.

Also, homeless families have moved into abandoned homes, sometimes by design. News reports have described housing advocates breaking into foreclosed homes to let in squatters.

Kenneth Thomas, a Miami banking consultant, said that in some cases families who foreclosed homes from banks move in to discover someone else living there.

“In one case,” a new buyer “went to go inspect the property, met with a person living there, and the person living there had a bat,” Mr. Thomas said.

Others say institutions are being stingy in rehabilitating homes to attract buyers.

Dick Esposito, a Maryland developer who repairs and flips REO properties for Chevy Chase Bank, said it rarely approves work he deems necessary. In one instance, Mr. Esposito said, he argued for a $3,500 kitchen renovation to make a house saleable, but the bank’s strategy was to reduce the price of the home by $5,000 every month until it sold. (The bank did not respond to requests for comment.)

“When the basement floods, there’s mold. We rip out drywall, dry it out, spray it with mold retardant,” and the bank does not “want us to put the drywall back,” said Mr. Esposito. “They become unfinished basements.

Also, foreclosed homes in his area demand 24-hour surveillance, he said.

“I could see them putting a minimal amount of money in and…making more money,” Mr. Esposito said.

Lenders providing credit to buyers of foreclosed homes say banks that own the real estate are shirking their responsibility to make repairs in time for moving day.

Mark Savitt, the president of the National Association of Mortgage Brokers, said his members have encountered situations where servicers will not pay for repairs.

“If they really want to unload these properties, and I’m sure they do, what they need to do is move more quickly,” Mr. Savitt said. “When they get an offer, and if there are repairs, they need to work with real estate agents to facilitate that repair.”

Prof. White said foreclosures are eating up a lot of cash. “Right now the mortgage servicers have made a lot of advances. They’re paying legal fees, maintenance fees — they’re just unwilling to put another nickel into the house when they’re not sure if they’re going to get it back or not.”

Those defending the industry’s practices say servicers are not skimping on resources.

“A lot of banks get a bad rap,” said Alan Jaffa, the chief financial office of Safeguard Properties Inc., a Cleveland firm that lenders hire to manage foreclosed properties. “They’re spending hundreds of millions of dollars — if not billions — protecting homes.”

Ben Windust, the senior vice president of default and retention operations for Wells Fargo Home Mortgage, said REO resales get tricky when more than one firm is involved in any step in the process.

“If you’re servicing for others, like if you’re working on a short sale and the loan is with Fannie Mae or Freddie Mac, we have a certain amount of delegated authority to accept offers, and sometimes we don’t,” Mr. Windust said. “If there’s mortgage insurance, then you have to get approval from the mortgage insurance company. The approval process can sometimes delay a response.”

Federal efforts to respond to the crisis have made a dent in the supply. Housing advocacy groups and municipalities working to utilize the $4 billion of block grant money authorized by the Housing and Economic Recovery Act to help communities buy, rehabilitate, and flip foreclosed homes.

Several large banking companies also have undertaken voluntary modification programs. Those efforts may be mandated by Congress soon. The FDIC has been pushing a plan to use some of the Treasury Department’s $700 billion bailout to subsidize wide-scale modification efforts by servicers, and the Obama administration has said it supports the plan.

This month regulators unveiled guidelines instructing banks on how they could receive Community Reinvestment Act credit for preventing foreclosures through voluntary programs, reducing the blight of vacant homes on neighborhoods.

Robert Davis, the American Bankers Association’s executive vice president for government relations, called the guidelines “a very welcome recognition of activities that banks are already undertaking, that they should get CRA credit for.”

But not everyone says the institutions should be rewarded.

“We think it’s the responsibility of the banks to fix these loans, the bad loans that they made — they shouldn’t get extra credit for rectifying a predatory loan, for keeping the neighborhoods that they want to lend to intact,” said Alan Fisher, the executive director of the California Reinvestment Coalition.

Advocates touted other programs designed to keep homes occupied. For instance, Fannie, realizing that maintaining vacant homes poses challenges, is implementing allowing tenants in foreclosed properties to remain there and pay rent to the government-sponsored enterprise.

“Given that we’re trying to find a bottom” to the housing market, “that can’t really happen, given that you’ve got an excess level of supply,” Prof. White said. “We need to continue improving on ways of finding foreclosure alternatives, so if there’s any possibility that you’ve got a warm body in a house with any kind of cash flow, it’s worth working something out.”



Alan Jaffa

Alan Jaffa is the chief executive officer for Safeguard, steering the company as the mortgage field services industry leader. He also serves on the board of advisors for SCG Partners, a middle-market private equity fund focused on diversifying and expanding Safeguard Properties’ business model into complimentary markets.

Alan joined Safeguard in 1995, learning the business from the ground up. He was promoted to chief operating officer in 2002, and was named CEO in May 2010. His hands-on experience has given him unique insights as a leader to innovate, improve and strengthen Safeguard’s processes to assure that the company adheres to the highest standards of quality and customer service.

Under Alan’s leadership, Safeguard has grown significantly with strategies that have included new and expanded services, technology investments that deliver higher quality and greater efficiency to clients, and strategic acquisitions. He takes a team approach to process improvement, involving staff at all levels of the organization to address issues, brainstorm solutions, and identify new and better ways to serve clients.

In 2008, Alan was recognized by Crain’s Cleveland Business in its annual “40-Under-40” profile of young leaders. He also was named a NEO Ernst & Young Entrepreneur of the Year® finalist in 2013.


Chief Operating Officer

Michael Greenbaum

Michael Greenbaum is the chief operating officer for Safeguard. Mike has been instrumental in aligning operations to become more efficient, effective, and compliant with our ever-changing industry requirements. Mike has a proven track record of excellence, partnership and collaboration at Safeguard. Under Mike’s leadership, all operational departments of Safeguard have reviewed, updated and enhanced their business processes to maximize efficiency and improve quality control.

Mike joined Safeguard in July 2010 as vice president of REO and has continued to take on additional duties and responsibilities within the organization, including the role of vice president of operations in 2013 and then COO in 2015.

Mike built his business career in supply-chain management, operations, finance and marketing. He has held senior management and executive positions with Erico, a manufacturing company in Solon, Ohio; Accel, Inc., a packaging company in Lewis Center, Ohio; and McMaster-Carr, an industrial supply company in Aurora, Ohio.

Before entering the business world, Mike served in the U.S. Army, Ordinance Branch, and specialized in supply chain management. He is a distinguished graduate of West Point (U.S. Military Academy), where he majored in quantitative economics.



Sean Reddington

Sean Reddington is the new Chief Information Officer for Safeguard Properties LLC. Sean has over 15+ years of experience in Information Services Management with a strong focus on Product and Application Management. Sean is responsible for Safeguard’s technological direction, including planning, implementation and maintaining all operational systems

Sean has a proven record of accomplishment for increasing operational efficiencies, improving customer service levels, and implementing and maintaining IT initiatives to support successful business processes.  He has provided the vision and dedicated leadership for key technologies for Fortune 100 companies, and nationally recognized consulting firms including enterprise system architecture, security, desktop and database management systems. Sean possesses strong functional and system knowledge of information security, systems and software, contracts management, budgeting, human resources and legal and related regulatory compliance.

Sean joined Safeguard Properties LLC from RenPSG Inc. which is a nationally leading Philintropic Software Platform in the Fintech space. He oversaw the organization’s technological direction including planning, implementing and maintaining the best practices that align with all corporate functions. He also provided day-to-day technology operations, enterprise security, information risk and vulnerability management, audit and compliance, security awareness and training.

Prior to RenPSG, Sean worked for DMI Consulting as a Client Success Director where he guided the delivery in a multibillion-dollar Fortune 500 enterprise client account. He was responsible for all project deliveries in terms of quality, budget and timeliness and led the team to coordinate development and definition of project scope and limitations. Sean also worked for KPMG Consulting in their Microsoft Practice and Technicolor’s Ebusiness Division where he had responsibility for application development, maintenance, and support.

Sean is a graduate of Rutgers University with a Bachelor of Arts and received his Masters in International Business from Central Michigan University. He was also a commissioned officer in the United States Air Force prior to his career in the business world.


General Counsel and Executive Vice President

Linda Erkkila, Esq.

Linda Erkkila is the general counsel and executive vice president for Safeguard and oversees the legal, human resources, training, and compliance departments. Linda’s responsibilities cover regulatory issues that impact Safeguard’s operations, risk mitigation, enterprise strategic planning, human resources and training initiatives, compliance, litigation and claims management, and mergers, acquisition and joint ventures.

Linda assures that Safeguard’s strategic initiatives align with its resources, leverage opportunities across the company, and contemplate compliance mandates. Her practice spans over 20 years, and Linda’s experience covers regulatory disclosure, corporate governance compliance, risk assessment, executive compensation, litigation management, and merger and acquisition activity. Her experience at a former Fortune 500 financial institution during the subprime crisis helped develop Linda’s pro-active approach to change management during periods of heightened regulatory scrutiny.

Linda previously served as vice president and attorney for National City Corporation, as securities and corporate governance counsel for Agilysys Inc., and as an associate at Thompson Hine LLP. She earned her JD at Cleveland-Marshall College of Law. Linda holds a degree in economics from Miami University and an MBA. In 2017, Linda was named as both a “Woman of Influence” by HousingWire and as a “Leading Lady” by MReport.


Chief Financial Officer

Joe Iafigliola

Joe Iafigliola is the Chief Financial Officer for Safeguard. Joe is responsible for the Control, Quality Assurance, Business Development, Accounting & Information Security departments, and is a Managing Director of SCG Partners, a middle-market private equity fund focused on diversifying and expanding Safeguard Properties’ business model into complimentary markets.

Joe has been in a wide variety of roles in finance, supply chain management, information systems development, and sales and marketing. His career includes senior positions with McMaster-Carr Supply Company, Newell/Rubbermaid, and Procter and Gamble.

Joe has an MBA from The Weatherhead School of Management at Case Western Reserve University, is a Certified Management Accountant (CMA), and holds a bachelor’s degree from The Ohio State University’s Honors Accounting program.


AVP, High Risk and Investor Compliance

Steve Meyer

Steve Meyer is the assistant vice president of high risk and investor compliance for Safeguard. In this role, Steve is responsible for managing our clients’ conveyance processes, Safeguard’s investor compliance team and developing our working relationships with cities and municipalities around the country. He also works directly with our clients in our many outreach efforts and he represents Safeguard at a number of industry conferences each year.

Steve joined Safeguard in 1998 as manager over the hazard claims team. He was instrumental in the development and creation of policies, procedures and operating protocol. Under Steve’s leadership, the department became one of the largest within Safeguard. In 2002, he assumed responsibility for the newly-formed high risk department, once again building its success. Steve was promoted to director over these two areas in 2007, and he was promoted to assistant vice president in 2012.

Prior to joining Safeguard, Steve spent 10 years within the insurance industry, holding a number of positions including multi-line property adjuster, branch claims supervisor, and multi-line and subrogation/litigation supervisor. Steve is a graduate of Grove City College.


AVP, Operations

Jennifer Jozity

Jennifer Jozity is the assistant vice president of operations, overseeing inspections, REO and property preservation for Safeguard. Jen ensures quality work is performed in the field and internally, to meet and exceed our clients’ expectations. Jen has demonstrated the ability to deliver consistent results in order audit and order management.  She will build upon these strengths in order to deliver this level of excellence in both REO and property preservation operations.

Jen joined Safeguard in 1997 and was promoted to director of inspections operations in 2009 and assistant vice president of inspections operations in 2012.

She graduated from Cleveland State University with a degree in business.


AVP, Finance

Jennifer Anspach

Jennifer Anspach is the assistant vice president of finance for Safeguard. She is responsible for the company’s national workforce of approximately 1,000 employees. She manages recruitment strategies, employee relations, training, personnel policies, retention, payroll and benefits programs. Additionally, Jennifer has oversight of the accounts receivable and loss functions formerly within the accounting department.

Jennifer joined the company in April 2009 as a manager of accounting and finance and a year later was promoted to director. She was named AVP of human capital in 2014. Prior to joining Safeguard, she held several management positions at OfficeMax and InkStop in both operations and finance.

Jennifer is a graduate of Youngstown State University. She was named a Crain’s Cleveland Business Archer Award finalist for HR Executive of the Year in 2017.


AVP, Application Architecture

Rick Moran

Rick Moran is the assistant vice president of application architecture for Safeguard. Rick is responsible for evolving the Safeguard IT systems. He leads the design of Safeguard’s enterprise application architecture. This includes Safeguard’s real-time integration with other systems, vendors and clients; the future upgrade roadmap for systems; and standards designed to meet availability, security, performance and goals.

Rick has been with Safeguard since 2011. During that time, he has led the system upgrades necessary to support Safeguard’s growth. In addition, Rick’s team has designed and implemented several innovative systems.

Prior to joining Safeguard, Rick was director of enterprise architecture at Revol Wireless, a privately held CDMA Wireless provider in Ohio and Indiana, and operated his own consulting firm providing services to the manufacturing, telecommunications, and energy sectors.


AVP, Technology Infrastructure and Cloud Services

Steve Machovina

Steve Machovina is the assistant vice president of technology infrastructure and cloud services for Safeguard. He is responsible for the overall management and design of Safeguard’s hybrid cloud infrastructure. He manages all technology engineering staff who support data centers, telecommunications, network, servers, storage, service monitoring, and disaster recovery.

Steve joined Safeguard in November 2013 as director of information technology operations.

Prior to joining Safeguard, Steve was vice president of information technology at Revol Wireless, a privately held wireless provider in Ohio and Indiana. He also held management positions with Northcoast PCS and Corecomm Communications, and spent nine years as a Coast Guard officer and pilot.

Steve holds a BBA in management information systems from Kent State University in Ohio and an MBA from Wayne State University in Michigan.


Assistant Vice president of Application Development

Steve Goberish

Steve Goberish, is the assistant vice president of application development for Safeguard. He is responsible for the maintenance and evolution of Safeguard’s vendor systems ensuring high-availability, security and scalability while advancing the vendor products’ capabilities and enhancing the vendor experience.

Prior to joining Safeguard, Steve was a senior technical architect and development manager at First American Title Insurance, a publicly held title insurance provider based in southern California, in addition to managing and developing applications in multiple sectors from insurance to VOIP.

Steve has a bachelor’s degree from Kent State University in Ohio.