American Banker Article “For Lenders, New Costs to Foreclose”

As discussed in the following article from American Banker,whether litigation, ordinances or increased violations cities throughout the country are increasingly looking at avenues to address increasing foreclosures.

For Lenders, New Costs to Foreclose

Local governments eye fees to offset foreclosure effects

For some time rising foreclosures have led cities and states to consider ways to slow things down.

Now more municipalities are taking a different tack: ramping up the costs associated with holding on to a foreclosed property.

The response, which has emerged largely in Southern California and the Midwest, often takes the form of steep fines or other sanctions for code violations on foreclosed homes that have been sitting vacant. Where once the focus was primarly on keeping people in their homes, more recently efforts have been aimed at mitigating the effects of foreclosures on neighborhoods, especially when they happen in clusters.

Last week St. Paul became one of the latest cities to take such action. Mayor Chris Coleman gave 19 companies ? most of them big lenders and servicers ? 30 days to come up with a plan to rehabilitate foreclosed homes or face legal action.

“What we’re trying to do is have the lenders and banks come and work with us on an abatement or mitigation plan,” City Attorney John Choi said Friday. Many homes have become “a public safety hazard,” because people are breaking in to steal copper pipes or to take drugs.

Mr. Choi mailed warnings last week to Wells Fargo & Co., Deutsche Bank AG, U.S. Bancorp, HSBC Holdings PLC, JPMorgan Chase & Co., and Merscorp Inc., which runs an electronic mortgage registration system. He said these companies own or service about a third of the 1,700 foreclosed homes in St. Paul.

However, Ted Meyer, a spokesman for Deutsche Bank, said in an e-mail that even though its DB National Trust Co. acts as a securitization trustee on many properties, it does not “own or control any of the properties referenced in the letter” from Mr. Choi. “The trustee is not responsible for maintenance nor any other foreclosure-related issues,” Mr. Meyer said.

Similarly, Teri Charest, a spokeswoman for U.S. Bancorp, said it acts as a trustee on most of the St. Paul properties cited in the letter it received. As such, it is not responsible for repairs, she said.

Each letter came with a spreadsheet listing the vacant properties that Mr. Choi said the recipient company controlled, along with a list of claims the city could pursue if the company did not cooperate. Another 13 companies were sent letters Friday.

Susan Davis, an executive vice president at Wells Fargo Home Mortgage’s Minneapolis office, said the lender started a toll-free hot line in January that cities and counties can call when they are concerned about a property.

“Whatever the time frame, we will work closely with the city,” Ms. Davis said. “Everybody benefits when the home is maintained and reoccupied.”

R.K. Arnold, the president and chief executive of Merscorp, said in a written response to questions from American Banker that he had received the letter, and that his Vienna, Va., company “takes it very seriously.”

Merscorp will meet with St. Paul officials, Mr. Arnold said. “It is our responsibility, and we will fix the problem.”

HSBC and JPMorgan Chase did not return calls seeking comment.

An ordinance that took effect last month in Palmdale, Calif., requires lenders to pay a $100 fee to register vacant or abandoned homes that are in foreclosure, as well as up to $2,500 for code violations.

That ordinance was modeled on one that took effect in October in Chula Vista, near San Diego, and instituted a $70 fee to register vacant properties as part of an effort to keep home values from dropping further.

Several other California cities, including Calimesa, Fresno, and Oakland, are drafting similar proposals.

Officials in Buffalo, Cleveland, and Detroit ? cities with some of the highest foreclosure rates in the country ? passed strict code-enforcement measures last year and are taking steps to demolish structures that are deemed not worth saving.

Asset managers say violation fines have skyrocketed in some cities and are reaching as high as $1,000 a day.

“The cities are being so proactive in attacking the lender, thinking we’re the deep pockets,” said Shelley Kaye, an asset manager at First Option Asset Management Services LLC in Irvine, Calif., and the president of REOMac, a trade group for such outfits.

One problem is that cities often send code violation notices to the wrong address, so by the time it gets to an asset manager, the fines can be steep, she said. (Some of Mr. Choi’s letters were addressed to high-ranking executives like Josef Ackermann, Deutsche Bank’s chairman in Frankfurt.)

With servicing costs soaring, many companies do not want to make costly repairs, Ms. Kaye said.

Jonathan Engman, an lawyer with the Detroit firm of Fabrizio & Brook PC, who represents lenders, said cities are fining lenders anywhere from $200 to $2,500, even though taxes are being paid on foreclosed properties.

This month, he said, he appeared before the Detroit City Council and was given 24 hours to clean up a property before it went on a demolition list, even though city residents who owned abandoned properties were given deferments.

“There is no fair treatment of the industry,” he said. “Cities are using the citations as a tax.”

Robert Klein, the CEO of Safeguard Properties, a privately held Brooklyn Heights, Ohio, mortgage field services company, said lenders and servicers are trying to take “a proactive approach” to empty buildings but do not always have the legal authority to do so.

“Some of these properties are in default and have not gone to foreclosure sale yet, so lenders are limited as to what they can do,” he said. Some lenders have been sued for trespassing ? by borrowers who have defaulted

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About Safeguard
Safeguard Properties is the largest privately held field services company in the country. Located in Cleveland, Ohio and founded in 1990 by Robert Klein, Safeguard has grown from a regional preservation company with a few employees and a handful of contractors performing services in the Midwest, to a national company with over 500 employees. Safeguard is supported by a nationwide network of subcontractors able to perform any requested superintendence, preservation, and maintenance functions, as well as numerous ancillary services in the U.S., the Virgin Islands, and Puerto Rico.



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.



George Mehok

George Mehok is the chief information officer for Safeguard. He is responsible for all strategic technology decisions, new systems deployments and data center operations supporting a national network of more than 10,000 mobile workers.

George has more than 20 years of leadership experience dedicated to high-growth companies in the mobile telecommunications and financial services industries, spanning startups to global industry leaders.

George played a senior role in the formation of Verizon Wireless, leading the IT product development and strategic planning team. He led the integration planning for the Verizon merger including: GTE, Vodafone-AirTouch, Bell Atlantic Mobile and PrimeCo.

As chief information officer at Revol Wireless, a VC-backed CDMA wireless communications network operator, George’s team implemented an integrated technology infrastructure and award-winning business intelligence platform.

George holds a bachelor’s degree in political science and economics from Eastern Michigan University and an M.B.A. from The Ohio State University. He is a board member of Akron University’s School of Business Center for Information Technology, in addition to an advisory board member for OHTec.

In 2013, George won the Crain’s Cleveland Business CIO of the Year award for his team’s work in completing a major acquisition and technology transformation at Safeguard. In 2015, George’s team was recognized by InformationWeek’s annual Elite 100 ranking of the most innovative U.S.-based users of business technology. The mobile inspection technology developed at Safeguard was selected as InformationWeek’s “One of the top 20 ideas to steal in 2015”.


General Counsel and Executive Vice President

Linda Erkkila, Esq.

Linda Erkkila is the general counsel and executive vice president for Safeguard, with oversight responsibilities for the legal, human resources, training, compliance and audit departments. Linda’s broad scope of oversight covers regulatory issues that impact Safeguard’s operations, pro-active risk mitigation, enterprise strategic planning, human capital and training initiatives, compliance and audit services, litigation and claims management, and counsel related to mergers, acquisition and joint ventures.

Linda’s oversight of the legal department along with multiple compliance and human capital focused departments assures that Safeguard’s strategic initiatives align with its resources, leverage opportunities across the company, and contemplate compliance mandates. Her practice spans almost 20 years, and Linda’s experience, both as outside and in-house counsel, covers a wide range of corporate matters, including 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, 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.


AVP, Business Development

Tim Rath

Tim Rath is the AVP of business development for Safeguard. He is responsible for developing innovative growth strategies for Safeguard and developing and overseeing potential partnerships, mergers and acquisitions.

Tim joined Safeguard in 2011 as project director and has filled numerous roles within Vendor Management, most recently serving as director of vendor management, a role he assumed in 2011.

Prior to Safeguard, Tim worked as director of supply chain at PartsSource Inc. in Aurora, Ohio, a provider of medical replacement parts, procurement solutions and healthcare supply chain management technology services. He also has held sales positions with Rexel, ComDoc, and Pier Associates, all based in Ohio.

Tim holds a degree in marketing and sales from The University of Akron in Akron, Ohio. He also earned his FAA Certified Commercial UAS (Drone) Pilot license in 2017.


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.