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DSnews.com?has printed an article about Safeguard Properties donating $150,000 to Cuyahoga County’s Foreclosure Prevention Program.
13 Jun 2008
Housing Wire has printed an article about Safeguard Properties donating $150,000 to Cuyahoga County’s Foreclosure Prevention Program.
13 Jun 2008
Published in Managing REO June 11, 2008
By Robert Klein
11 Jun 2008
Robert Klein contributed an article to the June 2008 edition of Servicing Management magazine.
1 Jun 2008
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.
14 Apr 2008
A recent article in USA Today? discusses the challenges facing the loan servicing industry, including including increasing borrower contact with the goal if increased home retention.
14 Mar 2008
Published in March/April 2008 REOMAC Update Magazine
By Robert Klein
Statistics abound about how much property values drop when defaulted and REO properties fall into disrepair. This is why the mortgage servicing industry and other investors spend millions of dollars annually keeping properties in their portfolios up to code and in good repair. In many instances, even actively managed REO properties experience code violations resulting from weather damage, vandalism and other unexpected events.
One of the greatest challenges in effectively dealing with code violations has been the inability to create an effective communication channel between local code enforcement officials and the servicing industry.
Typically, when code enforcement personnel issue a violation, the violation is sent to the owner of record on file with local recorders’ offices. It is too common that this information is either out of date, or lacks accurate contact information so that violations can be brought to the attention of the right person and addressed in a timely manner. Even when the right entity is on record, the contact information may be incomplete or inaccurate. As a result, code violation notices can wind up in the wrong city, with the wrong department, and even worse, in a waste basket with piles of junk mail.
Over the past few years, the field services industry has worked diligently to address this issue on behalf of its clients. Prompt notification of code violations and timely remediation is essential in addressing property damage to prevent further deterioration and community blight. At Safeguard, we have actively developed a working partnership with thousands of code enforcement officials in cities across the country to eliminate this communication gap. Rather than sending notices to the entity on record when code violations occur on vacant properties, we have asked them to notify us, and in turn, we have identified the right contact, whether the property was in our client portfolio or not.
This approach has provided two advantages. First, it has given us an early alert about code violations on our clients’ properties, allowing us to address issues in a timely manner to prevent further property damage. Second, it has allowed us to help our colleagues in the industry, with a courtesy contact to the responsible party to make them aware of violations so they can engage their own inspection and maintenance process.
It is one example of how the mortgage field services industry works cooperatively to raise the level of service we all provide to our clients, and maintain the integrity of properties and neighborhoods across the country.
Recently, the Mortgage Bankers Association (MBA) added a Property Preservation Resource Center to its web site (www.mortgagebankers.org/propertypreservation). Through this site, code enforcement officials nationally can obtain property preservation contact information for mortgage service companies to facilitate the process when code violations come to their attention. It also provides a link to the MERS Servicer Identification System to identify parties responsible for specific properties. This service is an invaluable resource for code enforcement officials and mortgage servicers nationally to further open the lines of communication.
By working together to identify and address property violations quickly and effectively, we can all be more effective in maintaining the quality and integrity of vacant properties, helping our clients achieve faster and more valuable sales, and preserving neighborhoods for homeowners and their families.
Robert Klein, a long time REOMACTM member and supporter, is CEO of Safeguard Properties, Cleveland, OH, the largest privately held mortgage field services company in the U.S.
1 Mar 2008
Recently, the Cleveland Plain Dealer featured an in-depth look at the efforts of? the loan servicing industry to?mitigate the potential consequences of?the increasing number of vacant and abandoned properties. With the initial condition of these properties deteriorating (as increasing reports of “property stripping” surface), superior maintenance of these properties is vital to?protect them from ?further damages and return the properties to productive use.
24 Feb 2008
A recent article in The Buffalo News chronicles efforts by the servicing industry to return abandoned properties to productive use.
3 Feb 2008
Industry collaboration leads to adoption of Best Practices
published in Servicing Management, June 2007
By?Robert Klein, CEO, Safeguard Properties Inc.
The Department of Housing and Urban Development (HUD) recently issued HUD Mortgagee Letter 2007-03 (ML 2007-03).?The Mortgagee Letter provided a revision to the Preservation and Protection Requirements and Cost Reimbursements for properties that serve as collateral for mortgages insured by the Federal Housing Administration (FHA). These requirements entitled, “General Requirements for Preservation and Protection of Properties Securing FHA Insured Mortgages”. This guidance supersedes the policy requirements of ML 2002-10, ML 2003-05, ML 2004-07, and ML 2005-22, and parts of ML 2002-19. The revisions went into effect on April 30, 2007.
The issuance of ML 2007-03 was a culmination of a cross industry collaborative effort between HUD, Loan Servicer’s and Field Service organizations. Building on the momentum created during the National Property and Preservation Conference in November 2006, HUD was extremely proactive in reaching out to the industry to discuss “best practices”. The Conference Theme “Its About Time” provided the initial forum and framework for the Industry to discuss these best practices with a focus on creating an environment of efficiency and collaboration.
Many of the guideline revisions were as a result of a number of industry conference calls, issues raised at Industry conferences, and working groups formed to address guidelines that were in place. Within HUD ML 2007-03 , there are several changes that affect the way that the Industry is now expected to preserve and protect FHA properties. Highlights include:
- An overall increase in cost reimbursements for many P&P services and standard pricing for securing, boarding, and inspections;
- A definition of five different types of inspections;
- Triggering events that necessitate an inspection have expanded to include property conditions that may signal a non-monetary default;
- An increase in the maximum allowable securing fee to allow for the re-securing of a property without prior approval and a differentiation of the securing timeframes for pre and post-sale properties;
- Clarification of the distinction between temporary and permanent roof repairs, clear guidance when each is appropriate and an increased emergency roof allowable;
- Simplification of the winterization requirements
- Clarification of securing timing requirements for pre (15 days) and post-foreclosure (5 days) sale properties;
- Clarification of conditions under which HUD will accept conveyance of a property with mold;
- A new requirement for the use of digital photographs and a new flat-fee reimbursement;
- Revisions of the requirements surrounding initial grass cuts and an update allowing a Mortgagee to submit one bid per growing season for recurring lawn maintenance on an oversized lot rather than submitting new over-allowable requests each time the yard is mowed;
- Specific language that excludes normal household cleaning products from the definition of hazardous waste;
- Removal of the requirement for installation of the Reduced Pressure Zone (RPZ) device, except in areas where it is a state or local requirement;
- Instruction to immediatelyaddress damages upon discovery, such as flowing water and collapsed roof andapproval to submit an O/A request after the work has been completed;
The Property Inspection and Servicing Requirements within HUD ML 2007-03 provided a definition of five (5) inspection types. ?These include Occupancy Inspections, Initial Vacant Property Inspections, Vacant Property Inspections, Voluntary Pre – Conveyance Inspections, and Eviction Inspections.? The guidelines provide a succinct definition and requirement for each of these inspection types. The revised inspection guidelines also provided some additional requirements and clarifications.? In this regard:
- All inspections are now photo required;
- the Initial Vacant Property Inspection fee is now charged at the time of the initial secure;
- Interior inspections on vacant properties are now required on all visits following the initial secure;
- HUD now provides reimbursement for a total of 15 inspections within a calendar year;
- All inspections must be completed within 35 days of the completion of the last inspection;
- Reimbursement for Inspection Fees are now determined by the type of inspection (interior vs. exterior or gained access vs. did not gain access)
- The previously identified Hot Zones have been updated to include 13 zip codes in Chicago and 5 zips in Los Angeles.
- Properties deemed to be “Vacant but obviously being maintained” will no longer be secured
For years, the industry has lobbied for mandatory interior inspections to ensure early detection of issues that if not detected and mitigated, could lead to a material loss to the value of the property. Issues identified during these inspections often represent high risk matters that can, if not detected early, escalate and lead to a major loss to the property value. Common examples of issues identified during these interior inspections include new damage, worsening of previously reported damage, and the presence of a sump pump not properly maintained.? With the issuance of HUD ML 2007-03, Interior Inspections are now definitively required.
It has always been imperative that property condition be reported and documented with photos at the time of the initial secure.? The new Guidelines provided further clarification or requirements when an imminent source of property damage or a health and safety hazard is identified during an inspection. The following examples were provided by HUD but were not meant to be all inclusive:?
- Flowing water
- Collapsed roof
- Gas leak
In these (or similar) circumstances, the Mortgagee is required to take immediate action to remediate the damage or hazard following the receipt of emergency permission.? In instances where emergency permission cannot be obtained in advance, the mortgagee is instructed to submit and over allowable request immediately following the remediation action and must substantiate the emergency nature of repairs.
The Guideline revision clarified that wet/radiant heating systems are no longer required be up and running allowing for a material cost and time savings for the Industry.? Specific guidance was provided to define the requirements for each system type when performing winterizations.? New allowables were established for:
- Replacement/installation of electric and gas water heaters.
- Installation of an RPZ valve if required by local code
- Repair/installation of heating equipment if required to properly winterize the system.
A number of guideline revisions were addressed as well.? These include
- Mortgagees are no longer permitted to disconnect water meters
- Winterization steps have been clarified by system type; and
- Winterization season has been changed in several states
Debris and Hazard Waste Removal
HUD ML 2007-03 included a number of revisions and clarifications as to the requirements for the removal of debris and hazard waste. Interior debris removal is no longer permitted in Florida and Oregon.? Allowables were also established for large appliance removal, tire removal, and bug/pest infestation removal in order to improve efficiencies and eliminate bids. Importantly, debris removal allowables have changed. and a debris removal cost schedule by state has been provided.
HUD has also clarified the definition of hazard waste to eliminate “normal household” items. Specifically, the guidelines established that the following products, if found in quantities consistent with normal household use, are not considered hazardous waste for purposes of debris removal under this section.
- Non-flammable materials including reasonable quantities of paper and fabrics (unless stored near flammable chemicals),
- Common cleaning products and household chemicals such as insect repellent,
- Up to five gallons of paint and paint products,
- Lawn and garden products and fertilizers,
- Pool chemicals.
Bids to remove these items are not necessary but it is still required to report the presence of these items on updates submitted.
The issuance of HUD Mortgagee Letter 2007-03 provided evidence that Industry collaboration and cooperation is working.
1 Jun 2007