Cleveland Plain Dealer – REO Clearinghouse
Safeguard Properties was mentioned in an article in the Cleveland Plain Dealer in relation to a new company, REO Clearinghouse,?that was formed to ameliorate the glut of real-estate owned properties for mortgagors and lenders.?
Former Citigroup executive Heidi Coppola starts REO Clearinghouse to help deal with foreclosures
by Michelle Jarboe/Plain Dealer Reporter
Thursday May 21, 2009, 5:23 PM
The foreclosure-scarred streets of Cleveland and Cuyahoga County have become the proving grounds for a new type of company: A clearinghouse for homes that have been through foreclosure and are now owned by mortgage companies or banks.
Launched by a former Citigroup executive, the REO Clearinghouse is meant to be a middleman between lenders and loan servicers, who are stuck with hundreds of empty homes, and the cities, counties and nonprofit groups that want to clean up neighborhoods.
Between them, Heidi Coppola sees a business opportunity: Bringing companies and communities together to find a simpler, swifter way to get those homes off banks’ books and either renovate them or knock them down.
Coppola, a former lobbyist and securities lawyer who spent 23 years at Citigroup, left the financial services giant in January to create REO Clearinghouse. The company isn’t fully formed. But Coppola has a business model, based on sharing information, finding the best use for properties and brokering large-scale donations or sales of homes and land.
“The collaboration between the public, private and nonprofit sectors has a tremendous way to go,” said Coppola, who formed the clearinghouse with help from Robert Klein, chief executive officer of Safeguard Properties in Valley View. Safeguard works for major lenders and servicers to care for foreclosed homes across the country.
In Coppola’s vision, cities like Cleveland would get the benefit of bidding on properties in bulk, rather than making deals house-by-house and lender-by-lender. Servicers would have a one-stop shop to dispose of properties, plus access to information from communities about the conditions in neighborhoods and the prospects for a sale or demolition.
Klein and Coppola already have talked to Cuyahoga County Treasurer Jim Rokakis about roughly 550 bank-owned properties that might be good candidates for the county’s fledgling land bank. The land bank, set to open its doors June 1 at 323 Lakeside Ave., is a nonprofit government corporation designed to acquire, manage and dispose of thousands of vacant properties across the county.
The land bank has not committed to buying any properties. Rokakis sees potential for REO Clearinghouse to pave a smoother road to the demolition or rehabilitation of empty houses, which might otherwise stagnate or be sold to out-of-town investors looking to make a quick buck. But he wants to make sure the land bank gets the best possible deal — and doesn’t end up holding hundreds of homes that need to be demolished at $8,000 to $10,000 a pop.
“I don’t think we’re prepared to have somebody donate 300 homes to the land bank that need demolition without a check to help with the demolition, or some other properties that don’t need demolition that would be offered to us at a discount to market value,” Rokakis said. “We have to do some balancing off where we can.”
REO Clearinghouse is one group that has approached Cleveland city officials about tackling the foreclosure problem, said Chris Warren, chief of regional development for Mayor Frank Jackson. The city, which has a smaller land bank program, also has fielded overtures from financial institutions and a large group of national foundations and affordable housing advocates.
Coppola and Klein said REO Clearinghouse would not charge governments or nonprofit groups for services. The company’s paying clients would be lenders and servicers, whom Coppola would not identify.
She estimated that REO Clearinghouse could have contracts with servicers within a month, enabling the company to start negotiating large-scale deals involving properties owned by multiple lenders. Within six months, Coppola hopes to expand beyond Cuyahoga County, following the flow of foreclosures into markets including Chicago, Detroit, Atlanta and cities across California.
“It remains to be seen how successful we will be,” she said. “This is a very delicate dance, but I think we can get it right. I think we can walk that line. If we can make this work in Cleveland, we can make it work anywhere.”