FHFA Prepared Remarks of Melvin Watt

On May 8, the Federal Housing Finance Agency (FHFA) released the prepared remarks of Melvin L. Watt at the Greenlining Institute 22nd Annual Economic Summit.

Prepared Remarks of Melvin L. Watt Director FHFA at Greenlining Institute 22nd Annual Economic Summit

Thank you for that introduction and good afternoon to everyone.  It’s a real pleasure to be in Los Angeles, both because I get to speak at this important Greenlining Summit and because later I get to hang out with my only grandson.

I know that you have a number of important topics on your agenda today related to economic opportunity, and housing finance is certainly among the most critical of economic issues.  The work we do at the Federal Housing Finance Agency (FHFA) focuses on regulating and overseeing Fannie Mae, Freddie Mac, and the Federal Home Loan Bank System, which are all entities that play significant roles in our country’s housing finance system.  While none of these entities are lenders, their policies have important impacts on individuals and families looking to buy a house or find an apartment to rent, especially those who continue to face challenges following the recent financial crisis. 

In our job as regulator of the Federal Home Loan B?ank System and as regulator and conservator of Fannie Mae and Freddie Mac, we are constantly working to balance our statutory obligations to ensure the safety and soundness of our regulated entities and ensure that there is broad liquidity in the housing finance market.  In meeting these obligations, we expect Fannie Mae, Freddie Mac and the Federal Home Loan Banks to support credit access for homeownership and facilitate the financing of affordable rental housing for low- and moderate-income families, and we insist that they do these things in a safe and sound way. 

I’d like to spend my time today talking about two different, but related, areas of the work we are undertaking to fulfill our statutory missions.  First, I will focus on some of our conservatorship priorities for Fannie Mae and Freddie Mac that affect homeowners and renters.  Second, I will address FHFA’s work to achieve diversity and inclusion in our own shop at FHFA as well as what we are doing to ensure that our regulated entities are taking aggressive steps to do the same.

?Updates on FHFA Conservatorship Priorities for Fannie Mae and Freddie Mac 

Regarding our recent conservatorship activities with Fannie Mae and Freddie Mac, I should start with our announcements last month about the fees the Enterprises charge to guarantee loans and about the counterparty standards that will be applicable to the Enterprises’ private mortgage insurance company counterparties.  Reaching these decisions was a high FHFA priority that required very careful analysis because both decisions not only impact Fannie Mae and Freddie Mac, but they also impact the broader housing finance market and the costs to borrowers looking to become homeowners. 

Some of you may recall that the first decision I announced after I became the Director of FHFA (a decision I actually made before being sworn in as Director) was to suspend guarantee fee changes that would have increased these fees in a way that I thought warranted further review.  Since then, after a very deliberative process, we announced our new guarantee fees decision just last month.  We decided to leave the guarantee fees charged by the Enterprises essentially unchanged.  While we made some small adjustments, when taken all together, the overall level of guarantee fees will continue to be comparable to the Enterprises’ current guarantee fee levels. 

On the counterparty standards for private mortgage insurers, we worked closely with the Enterprises to develop updated and more stringent eligibility requirements for all mortgage insurers looking to do business with Fannie Mae and Freddie Mac. With these updated standards, the Enterprises will have greater confidence that private mortgage insurers will have sufficient financial strength to pay their claims to the Enterprises whether economic times are good or bad.  This is important both to reduce risk to Fannie Mae and Freddie Mac and to permit continued access to credit for borrowers who get lower down payment loans.  These borrowers may not have the funds to make a 20 percent down payment, but options like private mortgage insurance enable creditworthy borrowers to get a mortgage with a lower down payment. 

In addition to our priorities on the loan origination side, we have also made decisions about the status of modification and refinance programs that are currently scheduled to end on December 31, 2015.  This enables me to announce today that FHFA has decided to extend the Enterprises’ participation in the Home Affordable Modification Program (HAMP) and the Home Affordable Refinance Program (HARP) for an additional year, until the end of 2016. 

Since HAMP and HARP were first launched in 2009, these programs have provided critically important relief for many borrowers by allowing them to lower their monthly payments and, as a result, have prevented many foreclosures.  HAMP provides modifications that allow borrowers significant payment reductions that are tied to their income.  This gives borrowers a more stable, affordable monthly payment and improves performance rates.  The HARP program allows borrowers, including those who are underwater on their mortgage and who are regularly making their mortgage payments, to refinance their loans to take advantage of historically low interest rates.

Although the number of new borrowers entering these two programs continues to decline, in part because many eligible borrowers have already taken advantage of them and in part because of recovering house prices, lenders and servicers are continuing to approve new HAMP modifications and HARP refinances.  Extending HAMP and HARP through the end of 2016 will provide real relief for borrowers who continue to face challenges either paying their mortgage or refinancing their loan.

In addition to these declining participation rates, HAMP and HARP were never intended to be permanent programs.  As a result, this will be the final extension that FHFA will make for the Enterprises’ participation in HAMP and we anticipate that this will also be the final extension for HARP. 

FHFA will use the time between now and the end of 2016 to consider how best to build on the lessons of HAMP for 2017 and beyond.  In the meantime, we have determined that it is appropriate to maintain the Enterprises’ streamlined modification program as part of their loss mitigation toolkit.  Because streamlined modifications require less paperwork and are easier for borrowers to use, they have proven to be an important foreclosure prevention tool since they were first offered in March 2013. 

For HARP, we are also going to use this time to explore possible streamlined refinance solutions for future Enterprise loans. This evaluation will consider the lessons learned from the HARP program and how those might apply in a non-crisis environment.  In the meantime, we want to encourage the 600,000 plus borrowers nationwide who would still benefit from the HARP program to take advantage of HARP while they still have the opportunity to do so and while interest rates remain low. Approximately 31,000 of these borrowers are right here in California, and we want them to join the nearly 3.3 million borrowers who have already taken advantage of HARP to reduce their monthly payments and obtain some financial relief.

I also want to spend a minute talking about the Enterprises’ activities in the multifamily market.  While the Enterprises have a role to play in the broader multifamily finance market, we believe that their most important role is in supporting affordable rental housing and other underserved market areas.  For that reason, when FHFA imposed a $30 billion cap on each Enterprises’ multifamily purchase volume for 2015, we made exceptions to the cap for certain affordable multifamily loan purchases. 

After taking a fresh look at this issue, FHFA announced yesterday that we are expanding the list of affordable housing categories that are excepted from the overall multifamily cap.  For example, we are putting in place a new exception tied to rental units that are affordable to borrowers earning 60 percent or less of area median income.  Additionally, we are adjusting this income threshold for more expensive housing markets where renters often spend a higher percentage of their incomes on rent.  By responding to continued strong growth in the overall multifamily finance market and making these adjustments, we have sought to achieve two objectives – facilitating ongoing liquidity in the multifamily market and further encouraging the Enterprises’ involvement in affordable rental housing.

As a result of these changes, we want to reinforce our expectation that the Enterprises should dedicate the necessary time, attention and resources to support this important part of the multifamily market.  The adjustments we have made should also support our ongoing work to develop a final housing goals rule and to re-propose a duty to serve rule for the Enterprises, both of which rules will address affordable multifamily housing, as well as single-family homeownership lending.  FHFA has been working on these matters for a good while and we expect to publish our final housing goals rule and re-propose our duty to serve rule in the coming months.

?FHFA’s Commitment to Diversity and Inclusion

Now let me turn my attention to FHFA’s diversity and inclusion initiatives, which I know are of particular importance to the Greenlining Institute and to many of you here today.  Under the Dodd-Frank Wall Street Reform and Consumer Protection Act and the Housing and Economic Recovery Act of 2008, FHFA was given statutory responsibility for ensuring diversity and inclusion both in our own shop at FHFA and at our regulated entities. 

Here in Los Angeles, I’d definitely be remiss not to highlight the critical role played by my former colleague on the House Financial Services Committee, Congresswoman Maxine Waters, in shaping the diversity and inclusion provisions in both of these statutes.  Without her, I dare say that there probably would be no Office of Minority and Women Inclusion (OMWI) requirements.  And, FHFA is fully committed to meeting those requirements both at FHFA and at our regulated entities. 

To further this objective, we have taken a number of steps since I became Director of FHFA.  First, we named a permanent OMWI Director and placed her on our executive management team reporting directly to me.  In establishing the criteria for the person we selected, we insisted on someone who had both OMWI experience and someone who knew housing finance and could understand how to get minorities and women included in the business line activities at the regulated entities. 

Second, at the beginning of this year, as part of developing our 2015 Scorecard for Fannie Mae and Freddie Mac, we included commitment to diversity and inclusion as one of the overarching criteria we will use to assess Fannie Mae and Freddie Mac’s performance on all Scorecard objectives.  We’re already seeing the impact that this can have on opportunities for minorities and women to be included in the Enterprises’ business transactions.       

For example, the Enterprises are now making efforts to get minority-, women- and disabled-owned businesses and non-profit organizations involved in their non-performing loan (NPL) sales.  These sales provide a means for the Enterprises to sell severely delinquent loans to new buyers using new servicers who will work aggressively with borrowers to help them avoid foreclosure.  Conducting the right kind of outreach to entities that will maximize borrower engagement and neighborhood-based solutions is a critical component of successfully executing these sales in ways that will help keep more borrowers in their homes and help stabilize neighborhoods.     

Both as part of the 2015 Scorecard and as a result of NPL sale requirements that FHFA announced in March, the Enterprises are taking concrete steps to conduct outreach to educate minority-, women-, and disabled-owned businesses, as well as non-profit stakeholders, about NPL sales opportunities.  Both Enterprises have pages on their websites 1? that prov?ide information about their NPL sales, including ways for interested parties to register for future NPL sale announcements.  The Enterprises are also setting up outreach sessions about the NPL sale process and FHFA’s requirements, and Freddie Mac held its first daylong seminar on this topic last week with over 100 attendees representing a broad range of stakeholders.  As part of this effort, both Enterprises are working to create smaller NPL pools for sale.  We believe this will encourage participation by more non-profit organizations and minority-, women- and disabled-owned businesses.  Freddie Mac recently announced its first small NPL pool in Miami-Dade County, Florida.

Fannie Mae and Freddie Mac also, of course, engage in substantial credit risk transfer transactions, and the Enterprises are having success involving minority-, women-, and disabled-owned businesses in some aspects of these capital market transactions and are exploring ways to involve them in other aspects.     

Finally, following the issuance of a proposed minority and women inclusion regulation last year relating to the Federal Home Loan Banks, earlier this week FHFA published the final rule in the Federal Register.  I want to thank the Greenlining Institute for the feedback submitted as part of this process.  This Rule puts in place new reporting requirements for the Federal Home Loan Banks about the makeup of their boards of directors.  The Rule also requires the Federal Home Loan Banks to report and describe the outreach activities they are using to encourage the consideration of diverse candidates for board positions. This additional data collection will allow FHFA to better assess trends in the Federal Home Loan Banks’ board diversity, in addition to facilitating continued dialogue between FHFA and the Federal Home Loan Banks about how best to enhance their board diversity outreach efforts. 

Our engagements with the Federal Home Loan Banks through our OMWI office are stimulating new conversations and excitement about how we can, working together, break through historical barriers that have existed and facilitate greater minority and women participation in this important segment of our economy.   

Moving forward, FHFA is working to build on our recent progress in a systematic way.  Recognizing that minority and women inclusion involves a lot more than collecting and reporting data, FHFA is in the process of finalizing a Strategic Plan for our Office of Minority and Women Inclusion that will chart our roadmap for furthering diversity and inclusion both within FHFA and at our regulated entities.  Through this Strategic Plan, we believe that FHFA can create a model OMWI program.  We know that this is an important part of the economic opportunity conversation you are having here today, and we look forward to ongoing dialogue with the Greenlining Institute and other stakeholders about our efforts. 

Thank you again for having me with you this afternoon and for giving me the opportunity to discuss the important work we have underway at FHFA.

1 Freddie Mac: ? http://www.freddiemac.com/npl/. Fannie Mae: http://www.fanniemae.com/portal/funding-the-market/npl/index.html?

Contacts: Media:  Corinne Russell (202) 649-3032 / Stefanie Johnson (202) 649-3030
Consumers: Consumer Communications or (202) 649-3811??

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: www.safeguardproperties.com.



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.