Linda Erkkila Talks About Working Together in the Mortgage Industry

The April issue of Mortgage Banking Magazine featured an article by Safeguard Properties General Counsel Linda Erkkila titled Let’s Work Together.

Let’s Work Together

The property preservation industry could help regulators and lawmakers draft better rules to protect borrowers and neighborhoods, if given a seat at the table. Otherwise, the outcomes are likely to remain confusing and ineffective.  

The most basic definition of the word “foundation” is something that provides support for something. Despite the simplicity of the definition, the importance of having a good foundation is indisputable.

No one frames a new house before laying footers. No one starts a child’s education in high school. There are infinite examples where practicality dictates laying a foundation before proceeding.

Effective regulations are no exception. Good intentions are no substitute for establishing a proper foundation for regulations, and proper groundwork starts with a solid understanding of the industry one intends to regulate. That comes from asking questions, getting answers and asking more questions.

Peripheral knowledge is insufficient. Without knowing the intricacies of a targeted industry, desired outcomes may suffer. Poor foundation leads to shaky results.

Property preservation
The property preservation industry, also known as the mortgage field services industry, is a prime example. But it matters little what you call it-most people have never heard of the industry, and many who are aware of its existence made its acquaintance due to the vacant and abandoned, and likely not yet foreclosed, home right next door.

Yet if it weren’t for the existence of the property preservation industry, that vacant home likely becomes the neighborhood eyesore at best and, at worse, a prime location for criminal activity.

If you are still in the dark, search the Internet for key words like “zombie property” or “blight” to bring you up to speed.           

Regulators, too, are making the industry’s acquaintance. This is largely due to its inextricable link to the mortgage industry’s meltdown, also known as the subprime crisis or the housing collapse-terms just about everyone has heard at some point in the past seven years.

In the race to regulate any subservicing activity affiliated with the hobbled mortgage industry, well-intentioned regulations aimed at perceived property preservation shortcomings are not likely to fulfill their calling because the basis for some regulations are misperceptions about the premises, protocol and processes upon which the industry functions.

This knowledge gap results in some regulations that do little more than add a layer of compliance for the sake of compliance.

Targeting pre-foreclosure activity
Property preservation companies provide a wide range of services intended to maintain a vacant property from the onset of vacancy until it becomes reoccupied by the current borrower or occupied by a new owner after a foreclosure.

Maintaining the external appearance of a vacant property tends to be non-controversial. Tensions arise out of the servicer’s right to enter, protect and preserve a vacant property prior to foreclosure-known as “securing” the property-and the servicer’s repossession of the property after foreclosure. Servicers rely on field services companies to assist with both phases.

As evidenced by recent proposed and enacted statutes, regulators aim to protect consumers during these phases, which all can agree are difficult and unpredictable periods for borrowers. Some regulations, however, fail to leverage protective procedures that are already an integral part of the industry’s procedures, or introduce requirements that do little to improve the borrower’s position but hamper preservation, thereby increasing the blight risk. 

Generally, the servicer’s right to secure a property prior to foreclosure is contractually granted pursuant to the mortgage agreement-a right generally triggered when a property is in default and vacant, and which allows the servicer to protect its collateral interest.

Servicers rely on property preservation companies to perform occupancy inspections to determine whether a defaulted property is vacant. Occupancy determinations are made at a single point in time, largely because investor guidelines require that a property be secured within a short time frame after it is declared vacant, to protect the property from damage.

Recent regulatory trends aimed at protecting both borrowers and neighborhoods, however, seek to elongate the vacancy determination decision period to a span of time as opposed to a point in time.

For example, proposed New York S.B. 7350, which gained no traction in 2014 but is expected to be re-proposed this year-defines default as at least three missed monthly payments, stretching the current standard; and requires a vacancy determination to be supported by three separate inspections, at different times of the day, over a two-month period. That essentially would double the current time period that a vacant property is left unprotected, subjecting the property and the surrounding neighborhood to blight and peril.

Property preservation industry controls-established long before the mortgage crisis-already employ occupant protective measures without contradicting investor guidelines and compromising properties. Perhaps a more beneficial undertaking is for all contingents to endorse a universal vacancy definition. The property preservation industry, with its decades of experience, would eagerly provide sound input for a sturdy foundation.  

Other statutes aimed at protecting borrowers during the pre-foreclosure period specifically focus on the securing process, but not every statute accurately grasps the methods by which the securing process is implemented.

A golden rule for property preservation companies is to never remove personal property during pre-foreclosure services, absent an imminent health or safety risk. Yet a recently enacted Maine statute requires property preservation companies, through their in-state contractor network that performs the services, to provide a detailed inventory of the personal property, excluding hazardous materials, removed during pre-foreclosure services. That inventory list should be blank every time.

The statute also requires each property preservation contractor to license its company as a debt collector. The statute is premised on the misperception that the property preservation company is repossessing the property when, in fact, the securing process is completely distinct from debt collection and intended solely to provide access to a property to protect it from peril, with no intent to lock an occupant out or repossess the property.

The true intent of the statute is to gather a registry of property preservation contractors performing work in the state, and to hold each accountable for its own acts. However, that goal would be easily accomplished through a simple registry in coordination with the property preservation companies that hire contractors.          

Anti-blight initiatives
Statutes aimed at maintaining the external appearance of a vacant property are generally non-controversial due to the common desire to keep neighborhoods free from blight and the dangers that often accompany vacant and ill-maintained defaulted properties. Yet some statutes contain mandates counterintuitive to the workings of the property preservation industry.

S.B. 7350 requires the foreclosing entity to maintain vacant properties to certain standards prior to foreclosure and before having possession of the property. Many of the standards align well with the typical services provided by property preservation companies, such as ensuring that the property is secure, free from blight and absent rodents and hazards. However, many of the standards go well beyond what can be and should be performed by an entity that has yet to take lawful possession of the property. These include repairing sidewalks and driveways; ensuring that the property and its stairways, decks, porches and balconies are structurally sound, with property anchorage and proper loads; and ensuring that doors and windows are weather-tight.

Setting aside the impracticality of having property preservation companies opine on architectural standards, imposing such mandates on the servicer while the borrower is still in lawful possession of the property, and when the servicer may have no legal right to access the property or limited rights to maintain it, subjects both the servicer and its property preservation agents to legal action.

The good intentions of the bill are overshadowed by the risky and burdensome load the legislation puts on the servicer. A deeper look into the longstanding property preservation standards would demonstrate that the core goal of property maintenance is already being achieved.

New Jersey enacted a similar statute (enacted and effective on August 15, 2014) to provide for and “regulate the care, maintenance, security and upkeep of the exterior of vacant and abandoned properties on which a summons and complaint in an action to foreclose has been filed.” As with proposed S.B. 7350, the requirements are triggered by the filing of the foreclosure action, prior to the servicer having legal possession of the property.

The New Jersey statute requires the servicer to provide contact information for an agent who will accept service of process for complaints of property maintenance and code violations. That agent, logically, is the in-state law firm handling the foreclosure.

The statute also requires contact information for an agent responsible for the maintenance and upkeep of the property. That agent, logically, is the servicer’s property preservation company. However, the unclear language in the statute has caused some servicers to believe that the “in-state” property preservation designee is not the company, but rather a singly named independent contractor. That would be a completely impractical approach, as no single contractor typically covers preservation for the entire state of New Jersey.

The clear objective of the statute is to provide quick notice of a violation to the property preservation company for expedient remediation, an objective best achieved by submitting the violation notice straight to the property preservation company’s code compliance department, regardless of what state that department physically resides in. That would enable the property preservation company to quickly dispatch the independent contractor who services the territory where the affected property is located. Any other solution delays the statute’s rapid-response intent and anti-blight objective, which, incidentally, is the same overarching objective shared by the property preservation industry. 

The foreclosure spectrum
Consumer protection post-foreclosure remains a high priority for regulators, and many statutes focus on protecting former borrowers during the difficult time of relocating and, in some cases, eviction. On the other hand, a servicer’s heightened obligations with respect to maintaining foreclosed properties are triggered almost immediately upon foreclosure.

In 2014, Michigan enacted legislation that took effect on June 19, 2014, which acknowledges the competing challenge of balancing the servicer’s and borrowers’ interests during a post-foreclosure redemption period, and clarifies the rights of both parties during that period. Implicit in the statute is the servicer’s right to inspect the property during the redemption period, subject to advance notice of the inspection to the former borrower, and his or her right to be present.

While the intent of the statute is understandable, the broad scope of its language creates reluctance to conduct redemption services for fear of non-compliance. Questions concerning whether any entry into the property constitutes an inspection, whether the statue applies to vacant properties and what constitutes notice to the former borrower have caused some servicers to do nothing and let the redemption period pass, for fear of non-compliance and in hopes that guidance, either informal or formal, develops.

Such reticence may have an adverse effect on vacant properties, and eventually neighborhoods. There is a wealth of knowledge and experience in the property preservation industry regarding post-foreclosure procedures and occupancy statistics-data that would be useful in drafting statutes of this nature to ensure that the common goals and protections intended by the statute are achieved upon enactment.

In contrast, the push to move vacant properties expediently through the foreclosure process to counter growing neighborhood blight due to lengthy foreclosures processes has resulted in the proposal or enactment of expedited foreclosure bills across the country. These measures also are referred to as “fast-track foreclosure” bills.

The intent is sound, as only vacant and abandoned properties qualify for fast-tracking, and the burden of proof is on the servicer to prove the required evidence of abandonment. To do so, many states offer model affidavits, but many of the affidavits are cumbersome to complete because the affidavit requires a single affiant, typically the property preservation agent, to attest to a battery of conditions.

The checklist of conditions assumes that the property preservation contractor making the abandonment determination based on physical point-in-time attributes, such as broken windows, accumulated trash and mail, an unkempt yard, and the like, is also able to attest to the presence or absence of conditions pertaining solely to the borrower’s status with regard to the underlying loan. And that is not an attestation a property preservation contractor can make.

The end result is cobbling together an affidavit, piecemeal, from different agents for the servicer to constitute a single required affidavit, which may not pass muster for the judge expecting more streamlined evidence.

Those with heightened familiarity with the property preservation industry could be instrumental in crafting model documents that apportion the responsibility for attestation to appropriate parties.

Leveraging industry knowledge
Perhaps a call for cooperation is in order. Perhaps it is time for the property preservation industry-no longer completely under the radar-to be invited to speak, or to raise its hand and ask to weigh in. Or perhaps the massive banking industry along with the investor community could encourage regulators to leverage the preservation industry’s collective knowledge before proposing regulations. 

Such an approach could help ensure that targeted regulations hit their mark–protecting consumers and communities alike. After all, that is the core tenet of the property preservation industry. It is what the industry was founded on or, simply put, its foundation.

Linda Erkkila is general counsel for Valley View, Ohio-based Safeguard Properties, the largest field services company in the United States. For more information on Safeguard Properties, visit www.safeguardproperties.com.

Please click here to view Let’s Work Together [pdf].

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 oversight of the Control, Quality Assurance, Accounting and 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.