Disposition of HUD-Acquired Single Family Properties; Updating HUD’s Single Family Property Disposition Regulations

Investor Update
October 2, 2015

Proposed Rule.


This proposed rule would revise HUD’s regulations that address property disposition. This rule proposes to consolidate and reorganize HUD’s property disposition regulations so that they better reflect industry standards and allow HUD to conduct its Single Family Property Disposition Program more efficiently and more effectively so that HUD can obtain the greatest value for its real estate-owned (REO) properties in different market conditions.

Supplementary Information:

I. Background

Section 204(g) of the National Housing Act (12 U.S.C. 1710g) addresses the management and disposition of HUD-acquired single family property, which includes HUD-acquired real and personal property assets. HUD’s implementing regulations are codified in 24 CFR part 291 (currently entitled, “Disposition of HUD-Acquired Single Family Property”). Under these statutory and regulatory authorities, HUD is charged with carrying out a program of sales of HUD-acquired and owned properties along with appropriate credit terms and standards to be used in carrying out the program. Property owned by HUD as a result of acquisition includes REO. The goals of HUD’s Single Family Property Disposition program are to reduce the inventory of single family properties in a manner that minimizes losses to the Mutual Mortgage Insurance Fund, promote the expansion of homeownership opportunities for American families by, among other things, selling such properties at a discount to state and local governments and HUD-approved nonprofit entities, and help stabilize distressed communities.Show citation box

As a result of recent changes in the housing market, specifically the economic and housing crisis that commenced in 2008, HUD acquired an unprecedented number of REO properties—98,342, 90,943, 103,215 and 111,416 in FY 2010, FY 2011, FY 2012, and FY 2013 respectively. This increase caused FHA to reexamine its disposition strategy for HUD-acquired single family properties and determine that it needed to revise, consolidate and reorganize its property disposition regulations to facilitate the expeditious sale of REO properties acquired and provide greater efficiency in the administration of HUD’s property disposition program. While part 291 addresses both HUD-acquired real and personal property assets, the focus of this proposed rule is on HUD’s disposition of REO properties. FHA’s intent is to bring its practices into conformance with industry standards and allow HUD to conduct its Single Family Property Disposition Program more efficiently and more effectively so that it can obtain the greatest value for REO properties in different market conditions.

II. This Proposed Rule

The proposed amendments to part 291 would make several changes to the administration of HUD’s single-family property disposition program with respect to the disposition of REO properties. These changes seek to provide greater efficiency in the administration of HUD’s property disposition program for REO properties, align FHA’s regulatory authority with its business practices, and provide flexibility in anticipation of future changes to the property disposition program for REO properties. The following section of this preamble describes the changes to the property disposition process proposed by this rule.

1. Ownership and Disposition Authority. HUD proposes to revise the heading of part 291 from “Disposition of HUD-Acquired Single Family Property” to “Disposition of HUD-Acquired and Owned Single Family Property” to better reflect the fact that HUD not only receives REO properties, but also holds and maintains them throughout the disposition process. For similar reasons, the heading of § 291.100, which states HUD’s general policy on disposition, would be changed from “General policy” to “General policy on HUD acquisition, ownership, and disposition of real estate assets”. Under section 204(g) of the National Housing Act (12 U.S.C. 1710(g)), HUD is authorized to carry on activity necessary for receiving, owning, holding and maintaining property before selling it. Section 291.1(a), which states the purpose of part 291, would be amended to reference HUD’s authority to acquire and possess properties. This authority would also be cited in § 291.90 governing sales methods to reiterate HUD’s authority to prescribe methods of sale and dispose of properties.

2. Appraisal of HUD REO Properties. Section 291.100(b) of the proposed rule would be revised to clarify that the list price for HUD REO properties may be established utilizing one or more evaluation tools. When an appraisal is ordered as part of the process of establishing list price, the value must be established by an appraiser who meets the requirements in 24 CFR part 200, subpart G (Appraiser Roster), and who is in good standing on the appraiser roster established under that section. All methods used by appraisers must be consistent with FHA appraisal requirements at the time the appraisal is made. This change will align requirements for REO appraisers with requirements for appraisers found in part 200, subpart G, to ensure consistency. The proposed rule would expand the valuation methods available to include alternative methods commonly used in the real estate industry, such as Broker Price Opinions [1] and Automated Valuation Models. [2]

3. Escrow Amount Required for Properties Needing Repairs. Currently, buyers of HUD-acquired properties can qualify for FHA mortgage insurance even if the property does not meet FHA’s minimum property standards, provided that they put money into escrow to make necessary repairs to bring the property up to standard. As currently codified in § 291.100(c)(2), a property that requires no more than $5,000 for repairs may be offered for sale in an “as-is” condition if the purchaser establishes a cash escrow in the amount of $5,000. This amount has not been increased since 1994. Based on present value calculations with an escalation of 3.5 percent, HUD estimates that repairs costing $5,000 in 1994 would cost $10,000 in 2015. Therefore, the proposed rule would increase the maximum repair amount that would allow a purchaser to acquire property under § 291.100(d)(1)(ii) to $10,000. In addition, in order to ensure that HUD can keep this amount updated, this rule proposes to add a provision at § 291.100(d)(1)(ii)(B) that would allow HUD to increase or decrease this amount based on changes to the Consumer Price Index [3] by issuing a Federal Register notice for comment. After consideration of public comments received on the notice, HUD would then publish the revised escrow amounts in a Federal Register notice. Finally, the rule would revise §§ 291.100(c) and (d) to better reflect the distinction between FHA’s role in the property disposition process and FHA’s role as an insurer of qualified properties when they are sold.

4. Listings. The proposed rule would clarify that HUD has the statutory authority to allow for a number of listings options in § 291.100(h) that real estate brokers may use to list REO properties. In addition to asset management and listing contracts, this rule would provide that HUD may use other methods deemed to be appropriate. This will provide HUD with additional flexibility to expedite the sales process, thereby ensuring that properties are disposed of efficiently and at minimum cost to HUD. In addition, the proposed rule would revise § 291.100(h)(2)(ii) to require the purchaser’s broker to submit bids through HUD’s designated electronic bid system rather than through the exclusive broker.

5. Settlement Cost Assistance Available to Owner-Occupant Purchasers. Section 291.205(b) currently provides that, in the case of competitive sales, HUD, upon request by the purchaser, may elect to pay all or a portion of the financing and loan closing costs as well as the broker’s sales commission, not to exceed the percentage of the purchase price determined appropriate by the Secretary for the area. The proposed rule would remove HUD’s obligation to pay the broker’s sales commission and specify that settlement cost assistance is only available to owner-occupant purchasers and not available to investor purchasers. Both “owner-occupant purchaser” and “investor purchaser” are defined in § 291.5.

6. Bidding Process for Competitive Sales: The proposed rule would update the bidding process established under the competitive sales procedures in § 291.205. Section 291.205(k) would be revised to provide for winning bids to be made available publicly rather than making them available for inspection at a time and place designated by the HUD local office. Losing bids would no longer be made available either through electronic posting or through the HUD local office. In addition, the rule would specify that winning bidders may be notified by their brokers using electronic mail and that an executed sales contract will be deemed final when, after being signed by both parties, the executed contract is sent by email rather than via postal service delivery to the successful bidder.

7. Good Neighbor Next Door (GNND). The objective of the GNND program is to improve the quality of life in distressed urban communities by encouraging law enforcement officers, teachers, and firefighters/emergency medical technicians, whose daily responsibilities reflect a high level of public service commitment and represent a nexus to the needs of the community, to purchase and live in homes in these communities, as the preamble to that final rule made clear. (See 71 FR 64422, November 1, 2006.) As to law enforcement officers specifically, one of the purposes of the GNND Sales Program is to revitalize distressed communities by deterring the commission of crimes with the presence of law enforcement officers in these areas. (See 71 FR 64424.) However, the currently codified rule, while it requires teachers and firefighters in the GNND program to live in the areas they serve, does not do so with respect to police officers. Therefore, this rule would add this requirement for police officers in accordance with the purpose of the rule.

This proposed rule further clarifies that similar requirements apply to all of the GNND participants by making a parallel change to §§ 291.500, 291.525 and 291.530, which are the sections on purpose and purchaser qualifications, in general. This rule also adds a definition of “locality” to § 291.505, and uses that term in this proposed rule rather than “area,” which is the current terminology, to avoid repetitive language and confusion with the concept of a “revitalization area” used in codified § 291.510.

Technical Changes

This proposed rule would revise the structure of § 291.5 to consolidate the definition for “Secretary” with the other definitions in this section.

Source: Federal Register (Proposed HUD Rule full version)



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.