Department of the Treasury Prepared Remarks of Counselor to the Secretary for Housing Finance Policy Dr. Michael Stegman

On March 2, the U.S. Department of the Treasury released the prepared remarks of Counselor to the Secretary for Housing Finance Policy Dr. Michael Stegman before the National Council of State Housing Agencies Legislative Conference.

Remarks of Counselor to the Secretary for Housing Finance Policy Dr. Michael Stegman before the National Council of State Housing Agencies Legislative Conference

As prepared for delivery

I last joined you nearly 2 years ago to this day, and it is great to be back at the NCSHA’s winter legislative conference to update you on a few issues that we both care about deeply.  While I have worked with housing finance agencies (HFAs) on a wide range of affordable housing issues over several decades in good times and bad, Treasury’s intensive, hands-on experience with HFAs was forged after the financial crisis. 

As I said in 2013, “just as the need to overcome a severe challenge may bring out the best in individuals — testing their tenacity, resourcefulness, and resilience – so, too, can such circumstances bring out the best in institutions. We have witnessed and learned from your actions up-close in implementing our crisis-driven programs, and we have come away knowing two things for certain: HFAs are vital elements of our nation’s housing finance and development infrastructure that must be preserved; and the American people are better off thanks to your work, dedication, and resilience.” And that’s why we will continue to count you among our most valued partners and seek opportunities where we can to work together to achieve mutual goals.

In the few minutes I will be with you this afternoon, I would like to bring you up to date on issues that are critical to your mission including helping distressed borrowers and communities, financing affordable rental housing, driving capital to underserved markets and communities, and expanding access to sustainable homeownership for low-and moderate-income, first-time homebuyers.

Housing Finance Reform

But first, I know that many of you want to know where we are on housing finance reform.  On this subject, let me be clear: the Administration stands by our belief that the only way to responsibly end the conservatorship of Fannie Mae and Freddie Mac is through legislation that puts in place a sustainable housing finance system that has private capital at risk ahead of taxpayers, while preserving access to mortgage credit during severe downturns.

The Administration remains ready, willing, and able to work in good faith with members of both parties to complete this important but unfinished piece of financial reform. As memories of the financial crisis fade, we cannot become complacent.  The best time to act is when the housing market is well along the path to recovery and credit markets are normalizing, not on the precipice of a new economic shock when there is little time to be thoughtful.

Hardest Hit Fund

It is surprising how quickly memories fade, but no one knows how dire the situation was better than you. At the height of the financial crisis, when the Administration was working hard to address the enormous housing crisis facing American families, we turned to you – the experts in what was going on in your states – and created a program that allowed you to tailor your own innovative approaches to prevent foreclosures and stabilize your communities. To date, the Hardest Hit Fund has provided more than $3.8 billion for 70 individual programs, which have helped 227,000 homeowners in some of our nation’s hardest hit communities begin to recover from a brutal recession.

Four and a half years into the program, we are still witnessing innovation, as HFAs adjust their local efforts to respond to the changing housing landscape and needs. For example, fourteen HFAs offer programs that help homeowners achieve long-term sustainability and/or reduce negative equity by providing principal reduction assistance in conjunction with a loan modification, re-amortization, or refinance. 

Six HFAs have allocated $372 million to approved blight elimination programs that will help stabilize neighborhoods and prevent avoidable foreclosures.  Five years ago, we probably would not have thought about blight elimination when looking for ways to prevent avoidable foreclosures, but for certain communities, that is exactly the type of program needed to help bring back a neighborhood that has been abandoned by many homeowners leaving their neighbors at risk.

It is this kind of flexibility to implement and adapt programs in response to changing economic and housing market conditions and homeowner needs that sets the Hardest Hit Fund apart. But for all the help the program has provided to communities and individual homeowners, I don’t think the Hardest Hit Fund and the HFAs get the credit they deserve.

Treasury is proud of this program, and we know that we need to continue to work with our partners to help you get as much value from the program as possible. We value our partnership with HFAs and look forward to continuing to work together to help our communities become stronger, safer, and more stable.

FFB-FHA Risk Sharing Partnership

I would like to now turn my attention to a recent example how Treasury and the Administration continue to search for creative ways to support the mission of housing finance agencies.

As you know, since 1992, the FHA Risk Sharing program has insured approximately $6 billion of mortgages while maintaining a negative credit subsidy and a lower loss rate than other FHA multifamily insurance programs. The program works by allowing FHA to delegate mortgage underwriting and processing to lenders that take 10-50 percent of the credit loss risk. Lenders that take a 50 percent risk share may use their own underwriting standards rather than FHA’s. To date, state and local HFAs have been the primary lenders, but FHA has authority to partner with other lenders as well.

HFAs have traditionally used Risk Sharing in conjunction with tax-exempt bond financing. Since the financial crisis, however, rates on tax-exempt multifamily bonds have exceeded taxable bond rates. In addition, by statute, Ginnie Mae may not securitize Risk Sharing mortgages as it does other FHA-insured multifamily mortgages. The Administration has continued to propose removing this restriction, but Congress has not acted.

In the absence of congressional action, Secretary Lew announced a brand new partnership with HUD and FHA last June to support the construction and preservation of affordable multifamily rental housing. Under the new partnership, the Federal Financing Bank is providing financing for loans insured under FHA’s multifamily risk-sharing program, significantly reducing the interest rate for affordable multifamily apartment buildings compared to the cost of tax-exempt bonds under current market conditions.

A pilot transaction under this program in Far Rockaway, Queens, sponsored by the New York City Housing Development Corporation closed last October, providing permanent take-out financing for a 1,100-unit apartment complex at an interest rate 87 basis points lower than the rate on a comparable transaction completed the prior month. Based upon the success of the initial pilot, the program is being made available to other approved FHA risk-sharing partners. I am proud to report that we already have a pipeline of acquisition deals in excess of $1.5 billion for fiscal year 2015 from 10 housing finance agencies to finance over 150 projects.

And we are focused on refining the program structure to accommodate demand and improve our ability to serve your needs. We understand that lenders and borrowers need greater certainty around borrowing rates. That is why we are working to provide for a 60-day forward rate lock in order to be more consistent with Ginnie Mae executions. We intend to roll out the next generation of documents to all of the HFAs in the pipeline who have deals that can close in the near future.

Low Income Housing Tax Credits (LIHTC)

Like so many other affordable rental production and preservation programs, this Treasury-HUD financing partnership is built on the strong foundation of Treasury’s Low Income Housing Tax Credit (LIHTC).  As you know, I have affirmed the Obama Administration’s strong support for the Low Income Housing Tax Credit every time I meet with affordable housing advocates and the HFA community. We know and appreciate that LIHTC is the very foundation of the affordable rental housing delivery system in this country, and that it has helped produce and preserve nearly 2.5 million affordable rental units in the US since its inception.

Over the past few years, the Administration has proposed several legislative changes to increase LIHTC’s scope and flexibility as part of the budget process, and we look to the Congress once again this year to do the right thing and approve the proposed refinements in LIHTC that would improve its effectiveness.

These refinements include giving states the flexibility to expand their LIHTC volume by nearly 50 percent by converting a portion of their tax-exempt Private Activity Bond authority into additional allocable tax credit authority.

The President’s FY 2016 Budget proposals would also allow larger credits to generate more investment by adjusting the formula for calculating the credits, encourage more mixed income housing as long as the average resident income does not exceed 60 percent of the area median and rents are restricted accordingly, and allow HUD to designate more Qualified Census Tracts that will earn an additional 30 percent LIHTC allocation. The LIHTC is the most efficient tool available to HFAs to provide affordable rental housing to low- and moderate-income families. We believe that the FY 2016 Budget proposals will greatly enhance its effectiveness.

Because the Low Income Housing Tax Credit has important social benefits, the LIHTC proposals are contained in the Administration’s Reserve for Revenue-Neutral Business Tax Reform, indicating our belief that this critical tax credit should be recognized for the important role that it plays in attacking the chronic shortage of affordable rental housing.

New Markets Tax Credits and the Capital Magnet Fund

While LIHTC remains the foundation of the affordable housing delivery system, Treasury also supports the production and preservation of affordable rental housing through the New Markets Tax Credit, which the President’s budget would make permanent beginning in FY 2016, and through a lesser-known program called the Capital Magnet Fund.

Authorized by Congress in 2008 in the Housing and Economic Recovery Act, the Capital Magnet Fund was created to be another source of funding for Treasury’s Community Development Financial Institutions Fund to finance affordable housing and related economic development activities and community service facilities. It would do so through competitive grants to CDFIs and qualified nonprofit housing organizations. When its funding through an assessment on new GSE business was not forthcoming, in FY 2010 Congress funded the Capital Magnet Fund with a one-time $80 million appropriation.
This inaugural round of funding resulted in awards to 23 organizations in 34 states, the District of Columbia and Puerto Rico, resulting in, among other development activities, the creation of more than 8,000 affordable rental units and more than 900 owner-occupied homes and related economic development.

While the Capital Magnet Fund’s lone appropriation is now exhausted and few state and local housing finance agencies were involved in these initial awards, the reason I bring this to your attention is that in December 2014, the Federal Housing Finance Agency directed Fannie Mae and Freddie Mac to begin setting aside and allocating funds to HUD’s Housing Trust Fund and Treasury’s Capital Magnet beginning January 2015. Resumption of funding is budgeted to generate more than $1.2 billion in additional affordable housing and community development resources over the next five years beginning in 2016, including more than $400 million for the Capital Magnet Fund.

Preventive Servicing

Now I would like to mention an area where housing finance agencies have been ahead of the pack and where we hope to see them continue to be leaders in the future.

The financial crisis revealed fundamental deficiencies in the way mortgages were serviced. The mortgage servicing industry was ill-equipped to help the number of homeowners in need of assistance and in many instances, slow to evolve their practices. As a result, families, communities, investors, and ultimately taxpayers paid the price in the form of unnecessary delays and too many foreclosures relative to other loss mitigation activities that would have produced better outcomes.

My own affordable homeownership research at the University of North Carolina prior to joining Treasury documented the importance of servicing to borrower outcomes.  In one published study, my colleagues and I found that after controlling for loan and borrower characteristics and regional economic conditions, the odds that a late-paying borrower would manage to catch up on payments instead of sinking further into serious delinquency and foreclosure can vary as much as 60 percent between servicers. This suggests that servicing strategies do matter.

Nobody knows this better than you do. Since the financial crisis, HFAs have been taking an increasingly proactive role in servicing their loan portfolios, and we believe that HFAs can play a more substantial role in both servicing and lending going forward. HFAs are in a prime position to serve creditworthy borrowers currently shut out the market in part by lender overlays due to concerns around repurchase risk and default servicing.  This is precisely because HFAs have developed the capabilities to manage the risks associated with difficult-to-serve borrowers. The HFA business model has been tried and tested, which is why they are a key part of mortgage lending.

It has been shown that HFAs achieve superior outcomes from both a loan performance and loss mitigation standpoint. Many HFAs require borrower counseling for first-time homebuyers and borrowers with FICO scores below a certain level, preparing higher risk borrowers for the financial challenge of homeownership. Studies conducted by the credit rating agencies and the manufactured housing industry have found that HFAs who service their own single-family loan portfolios provide better service and experience superior performance relative to third-party servicers.

Servicing their own loans has allowed HFAs to establish relationships with borrowers, communicate with troubled borrowers earlier in the process, and exercise every available loss mitigation option to keep families in their homes before resorting to foreclosure, leading to better outcomes. Private lenders may not pay enough individualized attention to nonperforming loans to resolve them quickly and are also not set up to utilize both federal and state programs that offer homeowner assistance.

While the start-up costs associated with self-servicing are high, we believe the benefits to both HFAs and borrowers – both existing and potential – can be substantial. Servicing can generate a substantial stream of revenue, permit more flexibility in loan underwriting, and result in better portfolio performance, potentially outweighing the additional cost. And by developing superior abilities to manage the risks associated with difficult-to-serve borrowers, HFAs will be valued partners in the Administration’s effort to ensure broad access to credit for all qualified borrowers.

We are counting on all of you to be strong partners as we work to make the housing finance system fairer and more sustainable, and I look forward to engaging with you in the future.

Thank you.

Please click here to view the prepared remarks online.

About Safeguard 
Safeguard Properties is the mortgage field services industry leader, preserving vacant and foreclosed properties across the U.S., Puerto Rico, Virgin Islands and Guam. Founded in 1990 by Robert Klein and headquartered in Cleveland, Ohio, Safeguard provides the highest quality service to our clients by leveraging innovative technologies and proactively developing industry best practices and quality control procedures. Consistent with Safeguard’s values and mission, we are an active supporter of hundreds of charitable efforts across the country. Annually, Safeguard gives back to communities in partnership with our employees, vendors and clients. We also are dedicated to working with community leaders and officials to eliminate blight and stabilize neighborhoods. Safeguard is dedicated to preserving today and protecting tomorrow.  Website:



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.