Managing REO “Initiatives to Combat Vacant Blight”

Robert Klein, CEO of Safeguard Properties, was recently interviewed by Managing REO Magazine regarding the initiatives of property preservation companies to lower the impact of vacant blight.

Initiatives to Combat Vacant Blight

Field service companies and property preservation teams are making a difference in local communities by forming new initiatives to care for vacant real estate owned assets.

By Jennifer Harmon

The industry is dealing with increasing amounts of vacant REO properties. As their values drop, mortgage companies are being hurt as much as the next-door neighbors.
Robert Klein, the founder and CEO of Safeguard Properties, believes lenders today are focused on doing a better job on the basics to maintain a property.

Beginning in September, Safeguard will launch its “Good Neighbor” door hanger contact procedure where at the initial secure of a vacant property, the company will leave door hangers at neighboring properties with an 800 number to contact the company 24/7 if they notice any questionable activity or maintenance issues that need attention.

This approach, which comes at no cost to clients, has received enthusiastic endorsement from code enforcement and city officials, says Mr. Klein. The privately held field service company, located in Cleveland now has over 500 employees nationwide.

“It’s very positive when you make contact,” he says. “The neighbor knows someone is paying attention to the home , to this vacant property. They know it is being maintained on a regular basis. It’s not just in limbo and no one is paying attention to it.”

It is critical to understand these properties. The industry spent well over $1 billion last year to secure and maintain safety and health issues of these homes, according to Mr. Klein. “I think we have a great responsibility. Vacant properties impact me and where I live. As an agency, I think it’s something we should be doing. We can’t solve the entire housing problem, but in our little world, we do what we can. We make the best out of a bad situation.”

Safeguard is focused on proactively partnering with cities and municipalities in dealing with issues that lead to vacant blight. Servicers and local govemments are partners in fighting blight, maintaining safe neighborhoods and ensuring properties are maintained.

Mr. Klein says the correlation between vacant properties and criminal activity is also well documented in communities nationwide.”As foreclosures and vacancies mount, we have seen a material increase in the number of copper pipe thefts, arsons and related crimes at these vacant properties. This ripple effect drastically reduces the servicer’s collateral in their assets and wreaks havoc on the communities where the properties exist.”

During extensive communication with code enforcement officials around the country, Safeguard found that it is common practice that all complaints regardless of type (tall grass, theft, vandalism, etc.) must be acted on appropriately to resolution. Typically, the city will issue a citation, complete the required maintenance, declare the property a nuisance and/or place the property on the local fast track for demolition.

“We’ve been in touch with code enforcement officials for the past five years,”he says.”The biggest concern is that they can’t handle the calls coming in from the neighbors to respond to these complaints. It puts the burden on the city to send someone out.”

A lot of times the neighbor does not know who to contact at the lender or servicer they have an issue with a property. “We work with the cities. The MBA (Mortgage Bankers Association) has created point of contact on their web site with code enforcement to help resolve these issues.”

The company is supported by a nationwide network of subcontractors able to perform any requested superintendence, preservation and maintenance functions. With this door hanger initiative, it takes the burden off of the city officials to get to these complaints.

Vacant blights are a national issue. Mr. Klein says neighbors are the best eyes and ears to detect problems.Sometimes after a company like Safeguard does an inspection of a vacant REO, the day after the company leaves, something terrible can happen. “These programs add more security to the property to make sure it is better maintained.”

The biggest goal is to make sure the property is not an eyesore. Safeguard makes sure the grass is cut, that there are no broken windows and if there is a leak inside the home, the company addresses those types of problems.

Safeguard now does the maid service. After the mortgage company has taken title and the property is vacant, Safeguard goes out and cleans the property and removes the cobwebs.

“You have no idea what we find in some of these properties. We will wash the counters down, clean the fridge, put in air fresheners so it doesn’t smell like an REO,” says Mr. Klein.

“The lender wants to sell it as soon as possible to a homeowner who will live in the property. You want to make it as attractive as possible. But also sometimes it doesn’t make sense to make repairs. You have to make it look and smell good. We try to do the best we can. We do as much as we can so the neighbors don’t have a run down home with 50 tires in the front yard.”

Properties are becoming more seriously damaged as well. Some homeowners in foreclosure are so frustrated they will do serious damage to the property. They take out appliances, put holes in the walls and holes in the floor. “There is no rhyme or reason. They are taking their frustration out on the system or the process. We are seeing that more and more.”

By the time the mortgage company gets a hold of one of these properties, it is problematic. Safeguard will hire different contractors to do different repairs such as re-roof a home. In today’s market the industry is seeing an increase in the amount of repairs being done to vacant REOs.

“The goal of the mortgage company is to sell it as quickly as possible. Every day they hold on to it is costing them money, in addition to the foreclosure process. It’s a bigger financial loss. We want to make the house as inviting and attractive to the possible homeowner. This depends on the value of the property and how much the lender can get. The things you do to a $500,000 home are different than a home that is $30,000.”

Even for a home that is around $250,000, lenders are doing more for repairs. The objective is to get the highest return because the lender has already lost money. “It’s worth it to put in $10,000 to a home if you can get additional value on the home,” he says.

“Regardless of whether the repair is done or not,there is a heightened awareness to make sure the property compares with the neighborhood.”

Years ago, REOs competed against other REO properties, Mr. Klein recalls. “In today’s environment that is no longer the case. REO are competing with the homeowner trying to sell their property. You have to compete. If the neighbor has a nice front lawn with grass trim, you have to do the same thing. II’s a business decision.”

The bottom line is that vacant properties should conform to the rest of the neighborhood. In addressing the blight issue, it will take different means for different areas of the county, he said.

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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.