Elizabeth Squires Shares Insights on Technology, Compliance within the Industry
Safeguard in the News
November 2, 2021
Source: DS News
As 2022 approaches, property preservation companies are navigating through challenges presented by low foreclosure/REO volumes, navigating regulatory challenges posed by maintaining properties and preparing for an upswing in those volumes as moratoria and homeowners exit forbearance.
As with every other sector of the industry, the long shadow of COVID continues to stretch over both daily tasks and long-term planning, demanding that prop preservation companies attend to immediate needs while also anticipating where things will be headed in the new year.
Amid this daunting landscape, DS News spoke with industry experts from companies including Carrington, MCS, MSI, and Safeguard to learn how to maintain focus, balance, and productivity.
A Matter of Numbers
The issues facing the property preservation sector are familiar to anyone who has been watching the housing and mortgage markets over the past two years. Insufficient housing inventories were straining the system even before COVID-19. The arrival of the pandemic has tightened the screws on multiple fronts, ranging from the decrease in foreclosure volumes (and thus REO inventories) to ongoing labor shortages and supply-chain issues with such needed supplies as lumber and other crucial materials.
These issues have become stressors that have forced many vendors to rethink how they do business and strategize how best to weather the storm until relief appears. Unfortunately, for some, that wait has proven too long. Baker Breedlove, President and CEO of Mortgage Specialists, International (MSI), said, “It’s driven a lot of vendors out of the property preservation business and into new construction, renovations, or other more lucrative areas.”
“The moratoriums on evictions and the forbearance plans were all put in place to help homeowners who were negatively affected by COVID,” said Chad Mosley, President of Mortgage Contracting Services (MCS). However, he added, “That has a downstream impact on the field services industry and the property preservation business.”
According to Breedlove and several other experts, the lack of qualified property preservation vendors is felt most pronouncedly in rural areas.
“By definition, if there are fewer people, there are fewer people to get to the different properties.” Among other issues, this means it takes the existing companies longer to get through the available workload. “It takes more ‘windshield’ time,” Breedlove noted.
Nor are the property preservation sector’s challenges limited to the impacts of the COVID-mitigating policies such as foreclosure moratoria or forbearance. It’s not just about volumes, as Breedlove explained. Like countless other industries both nationally and globally, property preservation is suffering from labor shortages combined with an ongoing increase in the cost of materials.
Although the price has moderated in the last few months, for example, Chicago lumber futures traded at $707 per thousand board feet in late October. That’s less than half of a record high of $1,711.2 hit in May, but still well above pre-pandemic levels of around $400. A tight labor market and wildfires in western Canada have only worsened things, especially when combined with supply-chain issues. The cost of other building materials has also increased significantly since 2019, although without the dramatic price swings of lumber.
For instance, one of the large chlorine plants in Lake Charles, Louisiana, was damaged during Hurricane Laura, resulting in a shortage of chlorine, which then impacted property preservation companies that handle pool maintenance. For property preservation companies, 2021 has presented a mosaic of broad economic impacts alongside more localized issues that may spider-web out into more widespread consequences.
“Typically, when there’s an increased cost and goods, whether that be through materials or labor, that’s passed on to the end-user, whoever that is,” Breedlove said. “We see that in new construction, remodels, etc. However, on the property preservation side, most costs are fixed.”
Although there is a process in place that allows vendors to submit allowable increases to the Federal Housing Authority, Breedlove noted that “when inflation is hovering around 5%, it’s unrealistic to request that on all services, even though [costs of] inflation, materials, and labor impact all services.”
Since the low-volume environment results from issues beyond any property preservation company’s control, Mosley told DS News that MCS has used this slower period to ensure it is ready for when volumes do return to more normal levels.
Further complicating matters is a trend toward consolidation that has been at play throughout the property preservation sector. Mosley pointed out that decreased volumes, after all, are not solely the offspring of COVID-19. Those volumes have been well below the heights seen after the 2008 financial crisis for years. When combined with a robust economy in 2018 and 2019, the property preservation sector was already experiencing a consolidation trend well before the word “pandemic” became a staple of the evening news last year.
That consolidation meant fewer companies to choose from—a challenge for servicers, according to Candace Russell, VP of Post-Sale, Carrington Mortgage Services.
“There’s good and bad in having the industry consolidate,” Russell noted. “New companies can bring new ideas to the table, and they have different ways of sourcing their boots on the ground.”
When confronting these numerous challenges and figuring out how to do more with less, property preservation has turned to the same resource as countless other industries over the past 18 months. When in doubt, turn to tech.
Leveraging Technology While Maintaining the Human Element
Breedlove told DS News, “We focus on the end-user experiences as much as possible to try to find efficiencies to help our vendor network out.” For example, Breedlove noted that because vendors’ team members might need to spend more time getting from property to property,” properly leveraged technology can hopefully help release some of the pressure by allowing those workers to spent “less time with some of the administrative tasks.”
Ensuring that communications are swift and efficient can help streamline processes, perhaps requiring only one trip to a property rather than several, thus saving the contractor or other vendor valuable time.
“We want to make sure we have those strong relationships with our vendors as well,” Breedlove said. “It’s not a ‘rep code,’ it’s a person named Phil or Fred or Susan. It’s not a number; it’s a property. It is imperative that you do not get too disconnected to the end-user experience in our situation—from the vendors.”
MCS’ Mosley echoed that sentiment.
“We see our vendors as our lifeblood and treat them as business partners,” Mosley said. “We have a lot of tenured vendors in our network that have worked with MCS for a number of years. So those vendor relationships are deep and strong.”
Mosley said MCS’ average employee tenure is strong as well, at six years, with the management team in place for nearly a decade. “It’s very much about people, whether we’re talking about our team members, our clients, or our partners in the field. Making sure our vendors are successful is one clear key to success.”
A 30-year staple of the property preservation sector, Safeguard Properties offers a mobile app for inspections, enabling inspectors to check boxes for specific items and take and upload photos when prompted, rather than returning to an office before doing that work.
Safeguard’s Safeview Inspect Mobile is a real-time, mobile inspection application designed to provide full-service field support. Smart scripting enables customizable survey forms for different work types, which combines with industry-first multimedia capturing technology and built-in risk mitigation features such as location-based services.
“We want to decrease the barrier to entry to use our apps as much as possible,” said Elizabeth Squires, Director of Client Account Management for Safeguard.
Also on the tech front, MCS utilizes a proprietary technology system and integrations with various third-party systems of investors, insurers, and other business partners across the country. The proprietary MCS technology is a workflow management system featuring three modules. Employees and associates use the internal system—MCS 360—to issue and review work orders, helping drive quality performance. Second, the Vendor 360 module allows vendors to see what work has been assigned to them, deadlines, and other relevant info. Finally, Client 360 enables clients to place and review work orders, view results, look at photos, or run reports.
“The vendors rely on our system,” Mosley said. “We pride ourselves on our technology; we want it to be very, very user friendly. Most things come back to process, people, and technology, which are the three core focuses for us. You have to have the right vendors, good relationships with those vendors, and the technology in place to be able to transact and work with those vendors on a day-to-day basis and wrap that around sound processes.”
According to Mosley, the adaptability and flexibility provided by these tools give MCS a significant advantage in maintaining those relationships and tackling the headwinds facing property preservation.
“We want to make the vendor experience as flexible and nimble as possible,” Mosley said.
According to Breedlove, MSI also uses proprietary and third-party technologies that work together to provide users with the information they need in a concise, informative, and intuitive matter, regardless of the technology used at the front end.
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