FHFA Statement of Alfred Pollard

On April 7, the Federal Housing Finance Agency (FHFA) released the statement of Alfred M. Pollard before the Nevada State Legislature Judiciary Committee.


Statement of Alfred M. Pollard, General Counsel, FHFA, before the Nevada State Legislature Judiciary Committee

Chairman Brower and members of the Committee, thank you for the opportunity to appear before you today to address Senate Bill 306, which makes certain revisions to the Uniform Common Interest Ownership Act as adopted in Nevada.  SB 306 makes important changes to the law regarding the appropriate exercise of certain lien rights of common interest communities and the relationship to the important property rights of homeowners and lenders.  This has been the subject of recent attention due to a decision of the Nevada State Supreme Court.  As the Federal Housing Finance Agency (FHFA), the Agency for which I serve as General Counsel, and Fannie Mae and Freddie Mac are parties to litigation across the state following that decision, I will not be addressing any matters involved in these cases.   I may address topics that are raised in the litigation insofar as they relate to the legislation before the Committee that amends current law.   For purposes of brevity, I may refer to common interest communities as homeowner associations or HOAs during my remarks, although I am aware of the various forms of such arrangements. 

In sum, Senate Bill 306 with the proposed amendments does no harm to the principle of supporting homeowner associations seeking to maintain common areas at a time when certain unit owners are unwilling or unable to pay their monthly assessments.  The revisions contained in the bill will assist in assuring proper and timely notice to all interested parties of unpaid assessments and possible foreclosure actions.

FHFA and the Enterprises
FHFA is responsible for the effective supervision and regulation of Fannie Mae and Freddie Mac (the Enterprises) and the Federal Home Loan Bank System, which includes twelve Federal Home Loan Banks and the Office of Finance.  FHFA’s mission is to ensure that these regulated entities operate in a safe and sound manner and that they serve as a reliable source of liquidity and funding for housing finance and community investments.  Since 2008, FHFA has also served as conservator of Fannie Mae and Freddie Mac.

The Enterprises are major supporters of housing finance in Nevada and have significant positions in lending for units in common interest associations.  The Enterprises act through approved sellers that originate such loans and servicers that manage the collection of principal and interest payments and address any problems facing unit owners in meeting their obligations.

FHFA is concerned about state super-priority liens granting priority rights in foreclosure proceedings to HOAs.  The existence of super liens increases the risk of losses to the Enterprises and, ultimately, the taxpayers.  Today, I will discuss FHFA’s concerns and how SB 306 and the proposed amendment can help address some of those concerns. 

The Problem
The financial crisis and its attendant economic displacement have created problems for many HOAs, not only here in Nevada but across the country.  In many cases, associations have had a larger than normal number of delinquent unit owners failing to meet their obligations to pay monthly assessments.  This point remains critical—such payments are fundamentally the responsibility of the unit owner, not of a lender who financed the purchase of the property or a secondary market participant like the Enterprises.

HOAs have had to cajole, threaten and even resort to legal action to secure payments of these monthly dues.  Certain states, such as Nevada, have created so-called “super-priority” liens that provide if a property is sold at foreclosure, then a portion of the proceeds of a sale should go to the association to cover a certain amount of unpaid dues and these proceeds should be senior to all other liens, including an existing first mortgage.  As HOAs have struggled, some states have sought to add additional expenses beyond dues to the priority lien that HOAs enjoy over other creditors of a particular unit. 

With a super priority lien, the first lien holder—who may experience losses regarding a unit in the form of unpaid mortgage obligations—is being asked to cover additional costs that were not its responsibility and which would be, unlike payments for taxes and insurance, which are foreseeable, virtually impossible to escrow.  Still, first lien holders have been willing to shoulder some of the burden beyond their own risks by making reasonable contributions to cover unpaid association dues.  The reason is simple—maintaining common areas assists in maintaining the value of units in the  association, which is to everyone’s benefit.  But again, that concept has limitations and, at some point, too great a burden may be placed on lien holders who may find that altering their underwriting policies may be the appropriate course.  If the risks to a first lien mortgage increase, then there may be required adjustments in mortgage pricing.  How to address all these competing issues, including the ability in certain states for associations to move to a foreclosure and extinguish a pre-existing first mortgage, is the subject of this hearing.

Another aspect of the current state of the law is the impact on unit owners.  First, if underwriting standards change, some unit owners may face challenges in securing a loan to buy a unit or refinance.  Second, unit owners may face situations where a HOA moving to foreclosure interrupts efforts at a loan modification.

Senate Bill 306
Under Nevada law, a common interest association may foreclose on a unit on its own, employing a non-judicial foreclosure process in which lenders have little or no notice or ability to cure any unpaid HOA assessment amounts due under the priority lien.  The HOA lien does not have a priority over a first mortgage lien in ordinary circumstances, but has priority in Nevada to the extent that certain costs and assessments for common expenses have not been paid. 

As you are aware, a recent Nevada Supreme Court case held not only that the foreclosure by an association is in line with Nevada law, but as well that the first security lien is extinguished under the law if proper notice is provided.  This was a first interpretation of the statute by the Court and endorsed the concept of extinguishing a first mortgage, which had not been the practice before.

As a result, this means an unpaid assessment of $2,000 or $3,000 could extinguish a mortgage in the hundreds of thousands of dollars.  A lender therefore needs to decide whether it is willing to risk losing an obligation in the hundreds of thousands for another party’s losses in the thousands.

Senate Bill 306 as amended would improve certain elements of the current statute for parties in interest including unit owners and lenders. 

I would note that the statutory provisions regarding the priority lien—NRS 116.3116-116-31168—even as amended are very complex and involve multiple possible procedural requirements.  For the most part, I am addressing revisions that address the core issue of notification and the foreclosure process.

Section 1 of the bill places necessary limits on what an HOA may seek to recover.  While FHFA may not agree with every provision, this section does provide much needed clarity and retains the concept that unpaid obligations are obligations of the unit owner.  Section 1 provides a number of changes to clarify the scope, limitations and rules for collection of unpaid assessments.

Section 2 makes the most important contribution to certainty for all parties. First, Section 2 creates clear safeguards, including notice to the unit owner or their successor in interest and notice to the holder of a recorded first mortgage security interest of a delinquent assessment.  This formal notice requirement, which requires specificity on unpaid obligations, may spur unit owners to pay their delinquencies, but in addition provides an opportunity for a security interest holder to address the lien payment.  Associations must provide a formal statement of the amount of the overall deficiency with a breakdown of what the charges are for, including a separate statement of the amount of the association’s lien that is prior to the first lien mortgage and a statement that the  association may foreclose and extinguish the first security lien.  While I believe that such extinguishment of a first lien is not an appropriate approach for an HOA assessment, assuring proper and timely notice to holders of security interests and providing them the ability to pay the unpaid assessments and thereby protect their position is a positive step.  By receiving timely notice, under the proposed amendment, the mortgagee would have until five days before a sale occurs to cure the unpaid dues obligation.

Section 3 of the bill provides for more specific guidance on notices, by certified or registered mail, to each holder of a recorded security interest or their registered agent.  This is important to assure proper notice to all parties in interest. 

In Section 4, the bill provides for publication in a “public place” and in a newspaper as part of the notice process.  I would offer to the Committee that, if not already noted elsewhere in Nevada statute, adding “county website” to the “public place” language or otherwise clarifying that “public place” includes a county website, if such exists, would be beneficial as that is where many parties now turn along with newspapers to see if an encumbrance or potential sale affects a property.

In Section 6, the bill provides that if a payment is made by the holder of a first security interest of the amount of the priority lien no later than five days before a sale, the association’s lien does not extinguish the security interest.   This is a prudent approach.

Finally, the redemption period provided in Senate Bill 306 is a rational approach to a time frame that should be workable for all parties in interest, including unit owners, so long as it assures that protections exist that are workable for first mortgage lien holders.

In sum, the majority of amendments to current law improve the current statute.

I must be clear, however, that while the bill improves parts of the current statute, provisions that purport to extinguish first security interests of lenders are of great concern to FHFA.  While I am keenly aware of the concerns of common interest associations, the remedy contained in the law remains very controversial and, in my mind, disproportionate to the goal and it will give pause to lenders doing business in such jurisdictions.  Clearly, the state and, indeed, lenders want to protect associations in maintaining common areas; I hope you would still consider whether such a drastic remedy is appropriate to enforce something that is primarily the obligation of the unit owner.

 Extinguishing property rights is no inconsequential matter.  FHFA, which operates under federal law addressing such matters, must consider this as Fannie Mae and Freddie Mac review not only the legal issues involved, but as well the underwriting standards that apply in states that maintain such potential extraordinary remedies.  FHFA has an obligation to protect Fannie Mae’s and Freddie Mac’s rights.

By way of summary, FHFA does find that most of the provisions of SB 306 improve the situation for lenders and secondary market participants in Nevada and support common interest communities, while we continue to have concerns with other sections of the existing law and practices under that law. 

Again, thank you for the opportunity to appear before you today on this important topic. 

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

Please click here to view the statement 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.