Evaluating the Property Post Hurricane Disaster

published in REOMAC Magazine, November 2005?

By Robert Klein
CEO, Safeguard Properties

Hurricanes Katrina and Rita recently ravaged the Gulf Coast of the United States, fundamentally altering the landscape forever. As a company in the business of property preservation, Safeguard Properties has been intimately involved in the aftermath of these storms.
All across the region, homes have been destroyed, damaged, flooded and often plagued with toxic mold. Entire towns in Mississippi and Louisiana were, for all intents and purposes, ripped off the map. The cities and towns lucky enough to have escaped total obliteration still saw unprecedented levels of property damage. Many homes, even if not totally destroyed, are nonetheless essentially lost, destined to be razed rather than repaired, preparing the way for rebuilding.
Understandably, much of the focus will be on rebuilding in the wake of such devastation, and a great many millions of dollars have already been earmarked for that reconstruction. In many cases, homes and businesses will have to be built anew. But what of the properties still standing and of residents searching for new homes? Reconstruction will not begin for some time, several months at the very least. Gulf Coast residents have been flung far and wide, and many are eager to return back home; if not to the physical properties they left behind, at least to the cities and towns they fled.
A New Landscape
In the aftermath of this historic disaster we have found that more than the physical landscape of the Gulf Coast states has been altered? the real estate market itself has undergone a climactic shift as well. The real estate market post-disaster bears little resemblance to what it was before. In terms of the market, it?s a simple matter of numbers, the law of supply and demand. Tens, if not hundreds of thousands of displaced homeowners are now suddenly in the market for new homes.
A spike in the number of buyers, particularly one of this magnitude, is bound to alter availability, demand and therefore prices. This is exactly what Safeguard Properties has found to be the case. Change also comes with regard to matters of marketability, in that buyers are placing primary and immediate importance on purchasing structurally sound homes rather than looking for any certain design, ideal location or level of amenities.
In speaking with agents and appraisers in affected communities across Louisiana, Mississippi and to a lesser degree Alabama, it has become plainly apparent that valuations in this post-disaster environment have been significantly affected. Appraisers have seen a marked increase in demand for their services, and time is of the essence; many properties are selling quickly, without much if any negotiation between buyer and seller.
In fact, there seems to be a near total disassociation from accepted standards, not with regard to professionalism, but in terms of market forces and valuation techniques as well. Lenders? who require appraisals before releasing funds ?are often being sidestepped as desperate buyers are paying cash, at or above listed prices, for whatever surviving properties are left on the market.
A Buying Frenzy
People in this region are actively seeking properties that are still standing or at the very least salvageable. With so much of the coast left in rubble, there is now a premium placed on any piece of property left. Real property appraisal in such an environment has proved to be difficult at best. Market forces are erratic and nonstandard, with values being determined by a historic and sudden increase in demand and the appraiser is often left to fend for him or herself. For instance, comparable sales, the traditional key to an accurate and effective valuation, are simply no longer available for the vast majority of saleable subject properties.
On the whole, property values are increasing across the board. In places of relatively less devastation, the increase is negligible, perhaps a percentage point or two. Conversely, in more hard-hit communities appraisers are determining values 10-15% above normal. In fact, many homes? even some which had been on the market for three or more months before the hurricane ?are netting as much as 20% over the initial asking price. Some brokers refer to the scene on the ground as a ?free-for-all,? and that is actually an accurate assessment.
Lenders on the other hand, are still looking for pre-hurricane values on which to base lending decisions. It?s understandable that they?re hesitant to be pulled into what may prove to be an irrational housing market spike, but unfortunately that?s just not the reality on the ground. With property availability driven so far down and with such a dramatic increase in the number of home-seekers, pre-disaster values no longer apply. Bidding wars are driving up prices even on homes that sat dormant before the disaster. While not the most lucrative properties before the fact, in the aftermath they?ve become highly desirable commodities ? simply because they still exist.
Demand Dwarfing Supply
Both speculative investors and locally-based companies trying to find homes for displaced employees are currently adding to the volatility of the situation. Many companies are buying up properties “site unseen,” even without having access to sufficiently appraised market values. Even the rental market has been decimated as landlord investors, rather than renting their vacant units, are instead selling them for a profit. As this occurs, the price of the remaining rental units is rising. All of this brings a substantial tightening to the market.
For example: properties listed at $179,000 before the storm are now selling for $191,500 on average. That?s actually one of the more reasonable increases. At the extreme, one house in Kenner, Louisiana listed at $400,000 before Katrina is now listed at $1.2 million. To account for the increased demand, appraisers are increasing their value estimates by an average of 5% to 10%, with some adding as much as 15% to pre-disaster value. It is, as stated earlier, changing the face of the market. But is this a long-term phenomenon, or is it as the lenders seem to think, that we are simply in the midst of a passionate, irrational spike?
The Days Ahead?
If there is any lesson to be learned from the aftermath of the natural disasters, it is that the industry needs to take a careful look at the evaluation of properties following disasters, particularly one of Hurricane Katrina?s (and to a lesser extent, Rita?s) magnitude. Perhaps there needs to be some level of standardization applied to property appraisal that takes into specific account the volatility of post-disaster market forces. As always, market forces will determine fair value for a property, and when an area has been demolished, sharply curtailing the availability of properties, prices are bound to rise sharply as well.

It is likely that in the affected communities, the market will eventually readjust to pre-disaster levels, with the expected associated decrease in property values. This is precisely why lenders are hesitant to base long-term investments (mortgage origination) on short-term market realities. A lender outlaying the funds for a disaster-inflated loan amount may very well lose money when the market stabilizes and returns to a semblance of normalcy (however long that may take).
In a time when the importance of the collateral to the lender has never been higher, there needs to be some understanding and agreement amongst all players as to how to best address the appraisal and evaluation of properties post-disaster. In the midst of crisis, traditional standards are pushed to the side. This does not serve anyone?s long-term interests.



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.



George Mehok

George Mehok is the chief information officer for Safeguard. He is responsible for all strategic technology decisions, new systems deployments and data center operations supporting a national network of more than 10,000 mobile workers.

George has more than 20 years of leadership experience dedicated to high-growth companies in the mobile telecommunications and financial services industries, spanning startups to global industry leaders.

George played a senior role in the formation of Verizon Wireless, leading the IT product development and strategic planning team. He led the integration planning for the Verizon merger including: GTE, Vodafone-AirTouch, Bell Atlantic Mobile and PrimeCo.

As chief information officer at Revol Wireless, a VC-backed CDMA wireless communications network operator, George’s team implemented an integrated technology infrastructure and award-winning business intelligence platform.

George holds a bachelor’s degree in political science and economics from Eastern Michigan University and an M.B.A. from The Ohio State University. He is a board member of Akron University’s School of Business Center for Information Technology, in addition to an advisory board member for OHTec.

In 2013, George won the Crain’s Cleveland Business CIO of the Year award for his team’s work in completing a major acquisition and technology transformation at Safeguard. In 2015, George’s team was recognized by InformationWeek’s annual Elite 100 ranking of the most innovative U.S.-based users of business technology. The mobile inspection technology developed at Safeguard was selected as InformationWeek’s “One of the top 20 ideas to steal in 2015”.


General Counsel and Executive Vice President

Linda Erkkila, Esq.

Linda Erkkila is the general counsel and executive vice president for Safeguard, with oversight responsibilities for the legal, human resources, training, compliance and audit departments. Linda’s broad scope of oversight covers regulatory issues that impact Safeguard’s operations, pro-active risk mitigation, enterprise strategic planning, human capital and training initiatives, compliance and audit services, litigation and claims management, and counsel related to mergers, acquisition and joint ventures.

Linda’s oversight of the legal department along with multiple compliance and human capital focused departments assures that Safeguard’s strategic initiatives align with its resources, leverage opportunities across the company, and contemplate compliance mandates. Her practice spans almost 20 years, and Linda’s experience, both as outside and in-house counsel, covers a wide range of corporate matters, including 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, 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.


AVP, Business Development

Tim Rath

Tim Rath is the AVP of business development for Safeguard. He is responsible for developing innovative growth strategies for Safeguard and developing and overseeing potential partnerships, mergers and acquisitions.

Tim joined Safeguard in 2011 as project director and has filled numerous roles within Vendor Management, most recently serving as director of vendor management, a role he assumed in 2011.

Prior to Safeguard, Tim worked as director of supply chain at PartsSource Inc. in Aurora, Ohio, a provider of medical replacement parts, procurement solutions and healthcare supply chain management technology services. He also has held sales positions with Rexel, ComDoc, and Pier Associates, all based in Ohio.

Tim holds a degree in marketing and sales from The University of Akron in Akron, Ohio. He also earned his FAA Certified Commercial UAS (Drone) Pilot license in 2017.


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.