Consumers Not Taking Advantage of Refinancing Opportunities

Investor Update
March 1, 2016

Many American borrowers are burned out by their efforts to improve their personal finances, and as a result have created a huge pool of refinancing opportunities that Freddie Mac thinks is not going to be taken advantage of.

Freddie Mac’s latest Insight & Outlook report, released Monday, cited the nearly $655 billion in outstanding conventional 30-year mortgage-backed securities with interest rates greater than 4 percent and found that several borrowers have passed on favorable opportunities to refinance to lower their mortgages to the lower rates available for at least two-and-a-half years.

According to Freddie Mac, borrowers who ignore extended refinance opportunities are said to be burned out by several factors, including decreased credit scores, job loss, and illness, which make them reluctant to try. Significant delinquencies making the cost of refinancing more than it is worth are also a factor.

Additionally, borrowers spooked by decreasing home values between 2006 and 2012??when national house priced plunged by 27 percent??have been reluctant to refinance, or may be too far underwater to reap any benefits from refinancing.

In raw numbers, burned-out borrowers, however they became fatigued, account for $420 billion of that $655 billion pot, or 64 percent.

While Freddie Mac doesn’t expect much of a change from most borrowers who’ve eschewed refi opportunities, the GSE does think that many of these borrowers “may wake up to their refinance opportunity this year, especially as recent house price gains are trumpeted in the press,” the report stated.

The current high-level loan-to-value potential (i.e., mortgages most favorable to HARP refinancing for borrowers who have not done a refi) is about $35 billion, according to Freddie Mac’s analysis. Delinquencies, conversely, account for $65 billion.

Freddie Mac also estimated that about $30 billion (4.6 percent) of the loans in outstanding MBS with coupon greater than 4 percent have already taken out a HARP loan and have a current LTV of 90 or above.

“Since the last Insight and Outlook, mortgage rates have continued to tumble, falling nearly 20 basis points,” the report concluded. “Lower mortgage rates will increase the number of borrowers who have rate incentive to refinance.”

That potential? About $122 billion, the report found.

Source: DS News

Additional Resource:

Freddie Mac Insight & Outlook (2/29/16)

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CEO

Alan Jaffa

Alan Jaffa is the Chief Executive Officer for Safeguard Properties, 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® Award finalist in 2013.

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Esq., General Counsel and EVP

Linda Erkkila

Linda Erkkila is the General Counsel and Executive Vice President for Safeguard Properties, with oversight of legal, human resources, training, and compliance. Linda’s broad scope of oversight covers regulatory issues that impact Safeguard’s operations, risk mitigation, strategic planning, human resources and training initiatives, compliance, insurance, litigation and claims management, and counsel related to 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. She has practiced law for 25 years and her experience, both as outside and in-house counsel, covers a wide range of corporate matters, including regulatory disclosure, corporate governance compliance, risk assessment, compensation and benefits, litigation management, and mergers and acquisitions.

Linda earned her JD at Cleveland-Marshall College of Law. She holds a degree in economics from Miami University and an MBA. Linda was previously named as both a “Woman of Influence” by HousingWire and as a “Leading Lady” by MReport.

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COO

Michael Greenbaum

Michael Greenbaum is the Chief Operating Officer of Safeguard Properties, where he has played a pivotal role since joining the company in July 2010. Initially brought on as Vice President of REO, Mike’s exceptional leadership and strategic vision quickly propelled him to Vice President of Operations in 2013, and ultimately to COO in 2015. Over his 14-year tenure at Safeguard, Mike has been instrumental in driving change and fostering innovation within the Property Preservation sector, consistently delivering excellence and becoming a trusted partner to clients and investors.

A distinguished graduate of the United States Military Academy at West Point, Mike earned a degree in Quantitative Economics. Following his graduation, he served in the U.S. Army’s Ordnance Branch, where he specialized in supply chain management. Before his tenure at Safeguard, Mike honed his expertise by managing global supply chains for 13 years, leveraging his military and civilian experience to lead with precision and efficacy.

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CFO

Joe Iafigliola

Joe Iafigliola is the Chief Financial Officer for Safeguard Properties. Joe is responsible for the Control, Quality Assurance, Business Development, Marketing, Accounting, and Information Security departments. At the core of his responsibilities is the drive to ensure that Safeguard’s focus remains rooted in Customer Service = Resolution. Through his executive leadership role, he actively supports SGPNOW.com, an on-demand service geared towards real estate and property management professionals as well as individual home owners in need of inspection and property preservation services. Joe is also an integral force behind Compliance Connections, a branch of Safeguard Properties that allows code enforcement professionals to report violations at properties that can then be addressed by the Safeguard vendor network. Compliance Connections also researches and shares vacant property ordinance information with Safeguard clients.

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.

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Business Development

Carrie Tackett

Business Development Safeguard Properties