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GAO-15-5 Troubled Asset Relief Program

On October 6, the U.S. Government Accountability Office (GAO) released GAO-15-5, a report subtitled Troubled Asset Relief Program:  Treasury Could Better Analyze Data to Improve Oversight of Servicers’ Practices.

TROUBLED ASSET RELIEF PROGRAM:
Treasury Could Better Analyze Data to Improve Oversight of Servicers’ Practices
GAO-15-5

What GAO Found

Through June 2014, the U.S. Department of the Treasury (Treasury) had disbursed about one-third of the $38.5 billion in Troubled Asset Relief Program (TARP) funds allocated to housing programs.  However, the number of new borrowers added to the Home Affordable Modification Program (HAMP), the key component of the Making Home Affordable (MHA) program, began to decline in late 2013 after remaining relatively steady since 2012.  Treasury has taken steps to assist more homeowners and also to address upcoming interest rate increases for borrowers already in the program (after 5 years, interest rates on modified loans may gradually increase to the market rate at the time of the modification).  For example, Treasury has extended the HAMP deadline for a third time to at least December 31, 2016, and required servicers to inform borrowers about upcoming interest rate changes.

Treasury monitors HAMP denial and redefault rates, but its evaluation of data to help explain the reasons for differences among servicers is limited.  GAO’s analysis of HAMP data found wide variation among servicers in reasons for denials of trial modifications.  Some of these variations may be due to differences in servicer practices that would not necessarily be identified by Treasury’s compliance review process or analysis for reporting errors.  GAO also identified wide variations in the probability of redefault even after controlling for differences in servicers’ loan, borrower, and property characteristics, using available data (see figure).  Federal internal control standards state that analyzing relationships among data helps inform control and performance monitoring activities.  Without more fully evaluating servicer data, Treasury may miss opportunities to identify and address servicer weaknesses and assist and retain as many borrowers as possible.

Finally, Treasury has implemented most of GAO’s past recommendations but has not fully implemented several that are intended to improve its oversight of the TARP-funded housing programs.  For example, Treasury requires servicers to have controls in place for monitoring compliance with fair lending laws.  But Treasury officials told us that they did not plan to assess these controls as GAO recommended because other federal agencies assess compliance with fair lending laws.  Without such assessments, Treasury cannot determine whether servicers are complying with Treasury’s requirement.  As stated previously, implementing this recommendation and others would improve Treasury’s oversight of TARP housing programs and help ensure that they assist and retain the greatest number of borrowers.

Why GAO Did This Study

Treasury introduced MHA in early 2009 and has allocated $38.5 billion in TARP funds to help struggling homeowners avoid potential foreclosure.  The Emergency Economic Stabilization Act of 2008 requires GAO to report every 60 days on TARP activities.  This 60-day report examines (1) the status of TARP-funded housing programs, (2) Treasury’s efforts to monitor and evaluate HAMP denial and redefault rates among servicers, and (3) the status of the implementation of GAO’s prior recommendations related to TARP-funded housing programs.  To do this work, GAO reviewed program documentation, analyzed HAMP loan-level data, and interviewed knowledgeable Treasury officials.

What GAO Recommends

GAO recommends that Treasury conduct periodic evaluations to help explain differences among MHA servicers (1) in the reasons they gave for denying applications for HAMP trial modifications and (2) in HAMP loan modification redefault rates.  Such evaluations would help inform compliance reviews of individual servicers and help identify any needed program policy changes.  Treasury agreed to consider making changes to its analytical methods for evaluating data on denial and redefault rates among individual servicers.

For more information, contact Mathew Scirè at (202) 512-8678 or sciremj@gao.gov.

Please click here to view the report highlights in PDF.

Please click here to view the report in its entirety.

About Safeguard 
Safeguard Properties is the largest mortgage field services company in the U.S. Founded in 1990 by Robert Klein and based in Valley View, Ohio, the company inspects and maintains defaulted and foreclosed properties for mortgage servicers, lenders, and other financial institutions. Safeguard employs approximately 1,700 people, in addition to a network of thousands of contractors nationally.
Website: www.safeguardproperties.com.

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CEO

Alan Jaffa

Alan Jaffa is the Chief Executive Officer for Safeguard Properties, 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® Award finalist in 2013.

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Esq., General Counsel and EVP

Linda Erkkila

Linda Erkkila is the General Counsel and Executive Vice President for Safeguard Properties, with oversight of legal, human resources, training, and compliance. Linda’s broad scope of oversight covers regulatory issues that impact Safeguard’s operations, risk mitigation, strategic planning, human resources and training initiatives, compliance, insurance, litigation and claims management, and counsel related to 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. She has practiced law for 25 years and her experience, both as outside and in-house counsel, covers a wide range of corporate matters, including regulatory disclosure, corporate governance compliance, risk assessment, compensation and benefits, litigation management, and mergers and acquisitions.

Linda earned her JD at Cleveland-Marshall College of Law. She holds a degree in economics from Miami University and an MBA. Linda was previously named as both a “Woman of Influence” by HousingWire and as a “Leading Lady” by MReport.

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COO

Michael Greenbaum

Michael Greenbaum is the Chief Operating Officer of Safeguard Properties, where he has played a pivotal role since joining the company in July 2010. Initially brought on as Vice President of REO, Mike’s exceptional leadership and strategic vision quickly propelled him to Vice President of Operations in 2013, and ultimately to COO in 2015. Over his 14-year tenure at Safeguard, Mike has been instrumental in driving change and fostering innovation within the Property Preservation sector, consistently delivering excellence and becoming a trusted partner to clients and investors.

A distinguished graduate of the United States Military Academy at West Point, Mike earned a degree in Quantitative Economics. Following his graduation, he served in the U.S. Army’s Ordnance Branch, where he specialized in supply chain management. Before his tenure at Safeguard, Mike honed his expertise by managing global supply chains for 13 years, leveraging his military and civilian experience to lead with precision and efficacy.

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CFO

Joe Iafigliola

Joe Iafigliola is the Chief Financial Officer for Safeguard Properties. Joe is responsible for the Control, Quality Assurance, Business Development, Marketing, Accounting, and Information Security departments. At the core of his responsibilities is the drive to ensure that Safeguard’s focus remains rooted in Customer Service = Resolution. Through his executive leadership role, he actively supports SGPNOW.com, an on-demand service geared towards real estate and property management professionals as well as individual home owners in need of inspection and property preservation services. Joe is also an integral force behind Compliance Connections, a branch of Safeguard Properties that allows code enforcement professionals to report violations at properties that can then be addressed by the Safeguard vendor network. Compliance Connections also researches and shares vacant property ordinance information with Safeguard clients.

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.

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Business Development

Carrie Tackett

Business Development Safeguard Properties