Kellie Chambers on Meeting the Regulatory Challenge

The March issue of Servicing Management featured an article by Safeguard Properties Assistant Vice President of Investor Relations Kellie Chambers titled Meeting The Regulatory Challenge

Meeting The Regulatory Challenge

How the new mortgage rules have resulted in unintended consequences for field services companies.

For some time, the mortgage industry has been buzzing about the overwhelming number of new regulations that it now must face. Regulators and government officials on the national, state and municipal levels have proposed and enacted legislation aimed at protecting borrowers and consumers in the wake of the recent recession, hoping that they never have to endure a crisis of that magnitude again.

Although these regulators and government officials have good intentions in passing these laws, some include language and stipulations that, in the mortgage industry, may hinder the day-to-day work that mortgage servicers and their field services partners complete in the field.

Managing some of these new regulations can become cumbersome for field services companies, but each one can serve as an opportunity to foster partnerships, educate the officials enacting the new laws and establish industry best practices. Where the rapid increase in the frequency of these regulations has become a challenge, the field services industry must provide solutions. Let’s take a close look at each of these challenges and explore some possible solutions
 
Challenge: Regulations cause delays in preservation services
Many new regulations and laws are aimed at protecting the borrower or consumer, but often those entrusted to write and enact these rules are not fully familiar with the role that field services companies play in the mortgage industry. This lack of knowledge and limited understanding of the full scope of work performed in the field can lead to legislation that can potentially harm the consumer or surrounding community.

For example, in Maryland, when a home is deemed vacant by a field services company, the state requires a 15-day posting period prior to the initiation of any preservation work. What this means is that the property must remain unattended for 15 days before field services companies can perform work to keep it from deteriorating or to mitigate any damages.

Specifically, delays in property preservation services in colder months greatly increase the risk of major damages, such as those that result from frozen and burst pipes. These additional – and completely preventable – issues result in increased preservation costs for the servicer and investor.

Another example is Michigan’s requirement that servicers coordinate interior inspections with borrowers during the redemption period after the foreclosure sale in order to allow the borrower to be present during the inspection. If borrowers are uncooperative or unresponsive, delays in maintaining properties are greatly increased. If the borrower abandoned the home, the odds that the servicer will have a difficult time contacting the borrower to set up the interior inspection are greatly increased. Again, the property continues to remain vacant and unattended, potentially causing the cost of preserving and protecting the home to increase.
 
Solution: Forge partnerships
Field services companies and officials need to come together on the local, state and federal levels to ensure both consumers and vacant properties are protected. There are concerns from both sides of the spectrum on how to juggle appropriate consumer outreach and property preservation timeliness, but a constructive and consistent dialogue does not exist. Field services providers can begin by opening up lines of communication and providing their expert recommendations as they partner with investors and communities to craft a uniform approach that meets the needs of all parties involved.
 
Challenge: Increasing property registration legislation/bond requirements
Property registrations present a challenge for national field services companies that manage properties on behalf of their servicing clients. Currently, there are thousands of property registration requirements across the country, with more being enacted each day.

As more and more ordinances are passed or current ones are revised, it becomes increasingly difficult to manage property preservation business, as each ordinance is unique to the city for which it was created. No two are alike – each has different registration fees and unique policies and procedures for submitting the proper registration forms, in addition to the widely differing city websites where this information is housed.

Even more challenging are the ordinances that have been enacted without a clear understanding of industry terminology and the work that field services companies do in the field every day. Regulations often contain vague language that try to use industry terms but misinterpret them.

For example, the word “default,” within the mortgage industry, means the borrower is 45 to 60 days past due on their loan; however, municipalities have interpreted “default” to mean several different stages of the foreclosure process – on day one of delinquency, on day 45 to 60, or at lis pendens, when foreclosure proceedings begin.

If an ordinance defines “default” as the first day a loan is late, and field services companies register it on behalf of their servicing clients, it is very likely that the borrower will have paid the loan payment by day two or day three. The field services company will have just spent hundreds of dollars in fees and human hours registering this property.

Another challenge for servicers and their field services partners is that ordinances are not consistent. Each asks for different fees, signage, maintenance, inspection frequencies, and types of forms and information they require. With thousands of different requirements, it is challenging for national field services companies to keep up. Additionally, it has been challenging to determine what jurisdictions and/or ZIP codes that are covered under a property registration ordinance, as the city itself is somewhat vague as to the scope of the legislation.

The most challenging trend in municipal ordinances is the cash bonds associated with property registrations. Cities in Ohio, such as Youngstown and Toledo, require a $10,000 cash bond when filing a vacant property registration. If the property is not maintained or code issues occur, the city uses a portion of that bond money to cover the costs to fix the issue. They also tack on additional processing fees. Any money not used by the city is returned once the property completes the foreclosure process.

In a city like Youngstown, which was greatly impacted by the recent housing crisis and is struggling to revitalize, servicers can have hundreds of vacant and abandoned properties.
 
Solution: Uniformity for local property registrations and ordinances
Municipalities often enact property registrations, ordinances and bond requirements as a way to protect their communities from vandalism and blight; however, what they do not fully realize, in the case of properties with defaulted loans or those real estate owned properties, is that mortgage servicers employ field services companies to maintain them on a regular basis.

Often, the ordinances overlap or contradict the work field services companies perform. Bonds, as part of property registrations, especially, are unnecessary for properties under the care of field services providers. Work is completed regularly on those properties to mitigate deterioration and potential code violations.

What is necessary is more uniformity among ordinances and property registrations that are geared toward a common definition of vacant and abandoned homes. Field services companies and municipalities need to partner to establish a common set of rules and regulations to ensure ordinance compliance and, also, that these rules can serve as a tool to protect consumers, neighborhoods and communities.
 
Challenge: Local point of contact requirements
New Jersey recently passed a bill requiring that field services companies provide the state with a single, local point of contact in case any issues arise at properties in that state. The contact is required to have an address within the state.

For a national company, such as ours, the challenge lies in having multiple vendors in each state. In addition, a property might have several different vendor companies, including those that do specialty work, that are tasked with maintaining certain aspects of the property. In a state like New Jersey, with thousands of properties in some level of default, it is difficult to choose one local vendor to manage all of these properties in order to comply with the requirement.

Additionally, having a single point of contact delays the preservation process because approvals to fix property issues identified by local officials need to go through an additional layer – the local contact – before they can be escalated up the chain to resolve damages or other issues.
 
Solution: Engage local officials and state mortgage banking associations
Municipalities need to understand that businesses do not have to be local to promptly address any property issues. National field services companies, like Safeguard, have been in business for many years and employ thousands of vendors to maintain millions of properties across the country. They rely on their vendor partners to know local laws and ordinances and abide by them.

Rather than requiring a local address, field services companies should reach out to local officials and make them aware of the work they do to protect properties in their communities. Many field services companies, including ours, have dedicated staff who travel across the country to educate officials and foster dialogue on the local level. Engaging state mortgage banking associations and state officials is the next step.
 
Challenge: Unnecessary vendor licensing
Field services inspectors and vendors in the field have incurred additional costs due to new regulations. New licensing requirements can be unnecessary because they do not relate to the work field services vendors complete for the mortgage industry. These licensing requirements also increase the cost of doing business for these small businesses and do not truly provide any benefit to the state or consumer.

For example, in some states, all field services inspectors are required to have a residential home inspector’s license. This is an unnecessary cost. A field services inspector’s primary responsibility is to determine whether a property is vacant and to check the condition of that property.

Also, Maine requires that field services vendors are licensed as debt collectors, even though that is not part of their job duties. The vendors have no information on the mortgage loan, nor any instructions to try to collect a debt.
 
Solution: Set national licensing standards
Through industry and government partnerships, field services companies need to encourage officials to create a nationwide standard for the certification of vendors and to participate in its development.

This will help ensure that there is an understanding of what services an inspector or preservation vendor provides and will align certification requirements to the work field services vendors complete.
 
How benefits arise from challenges
The new regulations and laws are not completely negative for field services companies. They require companies to take additional measures to ensure their mortgage servicing clients remain in compliance.

Our firm, for example, is investing in new technologies, and new regulations encourage further innovation in that regard, including automating systems to ensure the highest level of quality for the company’s servicing clients. It also includes additional controls for its vendors in the field by using geolocation technology and smart scripts in the company’s proprietary mobile applications. The results are improved quality and efficiencies for our company, its vendors and clients.

Additionally, field services companies are increasingly participating in both annual and periodic audits with clients, largely as a result of regulations now requiring increased monitoring of service providers. Audits are commonly performed at the field servicer’s office and cover an intense examination of every service, system and process.

These audits are beneficial to the field services provider – we use them as a way to partner with their clients to identify areas for improvement. The company also conducts its own internal audits to ensure it is meeting its clients’ expectations prior to their requests for information, and the company also conducts audits on its vendors to ensure quality and efficiency.

The biggest challenge with these new regulations and laws, other than the volume and frequency, is the misinterpretation or lack of understanding when it comes to the field services industry. National companies make it a priority to educate officials on the work they do in the field every day, but more can and needs to be done.
 
All can agree that there is a need to protect consumers and ensure the housing industry remains stable via new regulations, but new regulations come with hidden costs and future consequences that may be unknown at the time.

To ensure the proper understanding of the field services industry and alleviate extreme delays in preservation services or unnecessary expenses to all parties involved, it is important that field services providers forge partnerships with regulators and government officials. This level of engagement will help officials understand the goals of property preservation and the need for uniformity and national standards.

Kellie Chambers is the assistant vice president of investor relations for Safeguard Properties. She can be reached at kellie.chambers@safeguardproperties

Please click here to view Meeting The Regulatory Challenge 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.

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CHIEF EXECUTIVE OFFICER

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.

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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.

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CHEIF INFORMATION OFFICER

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”.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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AVP, Mobile and Analytics

Jason Heckman

Jason Heckman is the assistant vice president of mobile and analytics for Safeguard. He is responsible for both Safeguard’s mobile development and strategy as well as the company’s data warehousing and business intelligence. Jason oversees the design, development and release of all Safeguard’s internally developed mobile applications. He also oversees the development and delivery of operational and analytical data technologies throughout the organization.

Jason joined Safeguard as manager of mobile in 2012. During that time he led the development and integration of Safeguard’s mobile applications across the company’s vendor network to provide real-time data from the field. In 2014, he was promoted to director of mobile applications and named assistant vice president in 2017.

Prior to joining Safeguard, Jason was the director of application development and business intelligence for Revol Wireless, a privately held wireless provider in Ohio and Indiana.

Jason holds a bachelor’s degree in business management from Case Western Reserve University in Ohio.

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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.