Brandon Kirkham Discusses Managing Code Violations in Servicing Management Magazine
Expanded Services, Repairs Safeguard Servicers’ REO Portfolios
Alan Jaffa CEO, Safeguard Properties
Real-estate owned (REO) properties face more scrutiny from today’s savvy buyers. With the flood of foreclosures in the current market, mortgage servicers and investors struggle to compete with traditional-market homes. Every day a property is not rented or sold is money lost for servicers. Servicers and lien holders can protect and improve the quality and value of their REO portfolios through a variety of field service offerings. These include pre-sale repairs, REO marketability enhancements, major overhauls, and rental upkeep.
Because properties have different requirements pre-sale and post-sale, in the past, servicers established separate units to manage the specific processes for each. Now, they have begun to look at the process as a whole, working with their field service partners to make wise investments in pre-sale that protect the condition and value of properties in REO. In fact, the Federal Housing Administration
(FHA) now requires more repairs in pre-sale instead of waiting to address issues once the property goes through foreclosure sale, because it does not want damaged properties conveyed to REO.
REO Marketability Enhancements
Servicers are investing in additional services to enhance the marketability of their REO properties and engaging their field service partners to deliver higher levels of service. Neutral paints, new carpet, updated appliances and clean landscaping aren’t major repairs, but they go a long way to help REO properties appeal to prospective home buyers. Thorough cleaning and regular maid service, along with lawn maintenance keep the property in good condition and help buyers see a home’s potential.
When REO properties incur damages, the best way to protect against financial losses is to repair them. Damaged properties sell at far lower prices and sit on the market longer. When insurable damages occur, a field service partner’s hazard claims department can
manage the entire process. This includes filing the hazard claim, deploying reputable contractors to make the repairs once the claim is settled, and assuring that the work is performed to the servicer’s or lien holder’s quality standards. The goal is to turn a damaged property
into a gem so that the first impression of the property is positive and the property sells quickly and at the highest price possible.
When properties don’t sell because of the slow real estate market, more servicers have begun to offer their REO properties as rentals. This requires initial repairs to put the property in good, livable condition, and ongoing services when maintenance issues arise. Field
service partners can be vital to the process, obtaining competitive bids, managing all repairs, and assuring that the work meets quality standards. Field servicers also can utilize their vast contractor networks, technology and infrastructure to manage maintenance needs for
an entire rental portfolio.
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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 nearly 1,000 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.