Fannie Mae: Plywood Unacceptable for Pre-Foreclosure Properties
Safeguard in the News
November 4, 2016
The progress that clear boarding has made over the last few years when it comes to replacing plywood as the go-to method for securing vacant homes has been steadily picking up steam. Now, that progress appears to have kicked into overdrive.
Jake Williamson, Vice President of Real Estate Fulfillment at Fannie Mae announced at the National Property Preservation Conference (NPPC) in Baltimore, Maryland, a new allowable from Fannie Mae that promotes the use of clear boarding on pre-foreclosure properties.
Fannie Mae has been using polycarbonate clear boarding to secure vacant homes since early 2014 and as of this summer, it had been installed in about 4,000 Fannie Mae properties. Fannie Mae started using clear boarding in four states originally (Illinois, Florida, Ohio, and Michigan).
The new allowable announced by Fannie Mae at the NPPC finds the use of plywood unacceptable when securing vacant properties. Now all vacant properties owned by Fannie Mae will be required to be secured by an alternative to plywood, whether in pre- or post-foreclosure state, or REO starting on November 9. There will be a 90-day adoption period for servicers and vendors to apply the new rule going forward, according to Fannie Mae.
Five Star Institute president and CEO Ed Delgado was at the conference moderating a panel on the state of the housing industry and commented upon hearing the news. “This is a major step forward for the cause of curbing urban blight across communities,” said Delgado. “The application of plywood to a property is a tell-tale sign that the home is vacant and advertises it as a potential haven for criminal activity. Removing plywood from the equation while advancing clear boarding is a game changer.”
The use of clear boarding is expected to greatly reduce the problems that often result from using plywood to board up windows on vacant properties, such as community blight, lower property values, vandalism, squatters, and violent crime.
Despite the higher upfront cost, the rationale is that servicers will actually save on costs in the long term because of the product’s ability maintain the value of the property and shorten the disposition process.
“Eighty percent of the issues that the industry has with the conveyance timeline are resolved when the industry moves toward clear boarding,” said Robert Klein, Founder and Chairman of Safeguard Properties and Founder and CEO of Community Blight Solutions. “This move will have a tremendous impact on ensuring that properties return to the market in a more stable and marketable condition.”
Brandon Johnson, CEO of property preservation company GTJ Consulting in Detroit, told DS News in May 2016: “We try to explain that the benefits, in our mind, far outweigh the additional cost, because it’s a long-term solution. You can’t get in, you can’t break through it, and it withstands the elements. It doesn’t disintegrate over time, and it looks much better, because when you drive by, you can’t even tell that the property is boarded up. On a number of levels, we feel it’s a great product, and a definite step forward in the urban fight against blight for communities.”
Source: DS News