American Banker News Article

Robert Klein, Founder and Chairman of Safeguard Properties, was quoted in the American Banker article titled, Slow Pace of Repossessions Aggravates Problems in Housing.

Banks and mortgage servicers are not repossessing a massive backlog of distressed properties, which is likely to further depress home prices and prolong the housing crisis.

Millions of delinquent loans are in limbo because banks want to avoid taking losses and the government has given them plenty of options, from foreclosure moratoriums to loan modification programs.

But experts, including bankers, say the time has come to bite the bullet.

“The question is when do the big servicers that have adopted a policy of deferral flip the switch?” said Sean Dobson, chairman and chief executive of Amherst Securities Group.

Jack Schakett ,a credit loss mitigation executive at Bank of America Corp., pulled no punches answering that question.

“Clearly we’ve reached that point where it’s time to stop pursuing modifications and get on with the foreclosure process,” Schakett said. “We are in the period right now where we have many customers who do not qualify for modifications and they will be going through a dignified exit from the home.”

To allow such “dignified exits,” more banks have been sidestepping the foreclosure process and encouraging borrowers to do short sales or deeds-in-lieu.

In a short sale, a borrower sells the property at its current value even if the sale brings in less than the amount owed on the mortgage. For a deed in lieu, a borrower voluntarily gives up ownership of property.

Losses on both these “preforeclosure actions” can be less than on a foreclosure.

Citigroup Inc.’s mortgage unit has jumped on the bandwagon.

“We are reaching out proactively to all delinquent borrowers to do a short sale, with incentives to move them faster,” said Sanjiv Das, chief executive of CitiMortgage.

“We’ve been mindful of the price deterioration at the MSA [metropolitan statistical area] level in anticipation of the tail risk of prices going down further,” Das said. “We are pricing at where the market might go.”

Recent data provides some evidence that servicers are picking up the pace of foreclosures, however slowly.

Bank repossessions hit a record high in May for the second month in a row, with a total of 93,777 properties repossessed by lenders, up 44% from a year earlier, according to RealtyTrac., an Irvine, Calif., company that monitors foreclosure filings. All 50 states posted year-over-year increases in REO activity.

Still, 12.7% of all mortgages were delinquent at the end of April, while the percentage of loans in foreclosure still remained fairly low, at 3.18% nationwide, according to Lender Processing Services (LPS).

Some states, including Florida, Nevada, Arizona and California, have a huge disparity between the percentage of noncurrent loans and those in foreclosure. For example, in California 10.8% of loans are noncurrent, but only 3.2% are in the process of foreclosure.

Lenders looking to clear inventory are facing some stiff headwinds.

The expiration of the homebuyer tax credit, restrictive underwriting guidelines, high unemployment and a tough economy have reduced the demand for homes. Fewer potential homebuyers will be able to absorb the glut of homes.

“I think it will be a slow-drip process, a prolonged cycle of clearing these distressed homes,” CitiMortgage’s Das said.

Many banks adopted a “delay and pray” strategy last year when federal, state and local governments put a halt to foreclosures and required that borrowers be evaluated (and re-evaluated) for modifications, lenghthening the normal foreclosure timetables. (Several states issued foreclosure moratoriums in late 2008 in an effort to pressure servicers to find more solutions to keep borrowers in their homes. Fannie Mae and Freddie Mac enacted a foreclosure moratorium in November 2008 to give servicers time to adopt new modification procedures.)

None of the programs solved the problem. With high unemployment, a large percentage of borrowers who receive modifications are redefaulting, adding to the shadow inventory of distressed properties.

There are 3.5 million homes for sale today, and LPS estimated another 2.9 million homes have been repossessed or are in the foreclosure process. Around 4.5 million borrowers are at least 30 days’ delinquent on their mortgage. Once a loan is delinquent by two months, it’s extremely unlikely the borrower will catch up on the payments.

Standard & Poor’s has estimated it will take three years for the current shadow inventory of homes to clear the market ? and certain metropolitan areas will take much longer.

Georgette Prigal, the founder of Pheulpin Capital Group, a Garden City, N.Y., buyer and seller of distressed bank assets, said many banks have been stymied by their own optimism.

“They think we’re looking at a two- to three-year downward cycle and then we’ll see a big rebound in housing prices,” Prigal said. “They’d rather bleed a $50,000 loss here and a $60,000 loss there instead of realizing a full loss on a sale. But at this rate it’s going to take eight or nine years to clear the backlog.”

Cary Sternberg, the chief executive of Excellen REO, a unit of Fort Mill, S.C.-based Titanium Holdings Inc. that unloads repossessed properties, said most of the uptick in REO volume is coming from the government-sponsored enterprises ? not banks.

“There’s not a lot of volume yet but a noticeable increase is coming from the GSEs,” Sternberg said. “We’re not at the bottom. I think we’re still looking at three to five years before we get to a normalized market.”

Loans held in private-label mortgage securities ? those without federal guarantees ? made up 28% of the 5.3 million seriously delinquent loans that are 90 days or more past due, according to Freddie Mac. Fannie Mae and Freddie hold a combined 27%, followed by banks and thrifts with 16%.

Holders of residential mortgages only have a few choices.

They can sell their distressed loans, but at 30 cents on the dollar, few have chosen that route except for the worst portfolios.

Repossessing a property is expensive, because then the servicer must pay property taxes and maintenance expenses. Homeowner association dues, grass-cutting and winterizing can run an average of $6,000 a month while a property sits on the market waiting to be sold, Sternberg said.

That has left loan modifications as the preferred course of action for most servicers.

While many industry executives applaud the government’s effort for staving off what could have been a more severe housing depression, they acknowledge that without widespread principal reductions, most borrowers who have received loan modifications will still end up losing their homes.

Chris Gamaitoni,, an analyst at Compass Point Research and Trading, said banks are not taking into account the effects of redefaults, which are “going to slowly have to accrue through the banking system, weighing on long-term profitability.”

The four largest banks ? Bank of America, Citigroup, JP Morgan Chase, and Wells Fargo ? are expected to record chargeoffs of $196 billion this year and next, more than the $166 billion of loan losses taken in 2008 and 2009, said Craig Emrick, a senior vice president at Moody’s Investors Service.

JPMorgan Chase and Wells Fargo did not comment for this story.

Gamaitoni said he thinks 15 states have a high risk of falling into a double-dip housing recession. Three states ? Florida, South Carolina and Georgia ? are under the most severe stress because of high rental vacancy rates as well.

“The bubble was just too big, and it will take years to work through the extensions of credit,” Gamaitoni said.

Kyle Lundstedt, managing director at Lender Processing Services’ applied analytics group, said servicers are still overwhelmed by the volume of delinquencies and repeated changes to government programs.

“Because we had moratoriums, it was easy for people to think all the problems were resolved,” he said. “As REO ramps up again, we’re going to go back to a traditional scenario where areas with large volumes of REO will be very soft with depreciation; and other areas that don’t have excess inventory will start seeing appreciation again. Geography will become a critical driver again.”

Government intervention also has created costly glitches.

For example, the foreclosure moratoriums precluded servicers from taking back vacant properties, which could have been pushed on to the market sooner.

Freddie Mac has estimated that nationally 36% of seriously delinquent properties are vacant; Florida has the highest share of distressed vacancies, 56%.

“By the time the moratorium is over, a vacant property is worth half the price because of vandalism and neighborhood blight,” said Robert Klein, the founder and CEO of Safeguard Properties, a Cleveland firm that lenders hire to manage foreclosed properties.

Not everyone sees a further drop in home prices as necessarily a bad thing.

“Modification plans are not curing the problem,” said Dobson.

As more distressed properties get put on the market at lower prices, they will set comparable sales for other properties.

“This was an asset bubble,” Dobson said. “The loans have to be resized to what the properties are worth now because the value was never there.”

To view the article as it appears in American Banker, please click here

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 700 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.



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.