Managing REO “Municipalities Get Aggressive with REO”

Robert Klein, CEO of Safeguard Properties, was recently quoted in an article in Managing REO magazine.

Municipalities Get Aggressive with REO

By Jennifer Harmon

Local municipalities across the country are increasing penalties and fining lenders as much as $100 a day for code violations such as for each broken window on an REO home, according to speakers at a panel on vacant property at the Mortgage Bankers Association’s National Servicing Conference in Tampa, Fla., which had 1,873 attendees this year.

Robert Klein, chief executive of Safeguard Properties, a privately held field service company based in Cleveland, said servicers need to make sure their property preservation units communicate with local code enforcement officials at the city and county levels to open up dialogue and prevent this from happening.

“If you won’t listen, they will look for every legal measure they can to inflict some pain,” Mr. Klein told the audience. “We need to see more dialogue with municipalities.”

Because these ordinances are popping up everywhere, asset managers should work with local real estate brokers across the country to determine the specific requirements in different municipalities. Right now, about 600 cities are using some form of ordinance. He said local brokers are able to gather knowledge and counsel lenders on particular laws in their coverage areas.

According to Berry Laws, a partner with Kansas City, Mo.-based Martin, Leigh, Laws and Fritzlen PC, vacant property lawsuits are likely to occur more and more, because these properties cause problems in neighborhoods. “As values go down, crime increases, prostitution goes up, there is increased vandalism, looting of copper pipes, toilets and sinks, and properties are used for crack houses.”

It is a legitimate issue for the city, he described, because the government is concerned about neighborhoods where these properties are depreciating in value by thousands of dollars and apartment values go down. But the more money a city has to spend on taking care of these properties means less funding for local fire departments, police departments and schools, Mr. Laws added. “The liability is on the investor and servicer. Servicers are subject to the fines for these properties. There are a lot of constitutional problems with these requirements,” he said.

In some places like Kansas City, if the borrower defaults on a loan, after 14 days the lender must send someone out to see if the home is occupied. If it is deemed vacant, the lender must register the property and check on that home every month and sometimes every week.

“The lender is required to repair, secure, inspect and maintain these properties,” said Mr. Laws. “They must have someone change the locks, drain the pool, fix the windows. They have to put a sign on the house to tell everyone it is vacant with the contact name and phone number. Basically, ?Come vandalize me.? This advertisement has unintended consequences.”

The task of tallying the different laws all over the country and what each one says is overwhelming and a daunting task for everyone, he added. There are different laws in all 50 states and Puerto Rico, at the city, county and municipal levels. Each ordinance has significant differences that can be burdensome to the servicer. Fines are $1,000 a day in some cities.”

The speakers all agreed that the responsibility and cost of maintaining these properties has shifted from the borrower to the lender because of the time it takes to do a foreclosure.

In California, Mr. Klein said there are now hazard waste removal requirements regarding cleaning chemicals and solutions, specifically Windex. “In California, any waste — for instance, a gallon of paint — must be removed by an environmental company that is licensed to remove it. Your property preservation company can?t do it. You have to hire a waste removal company.”

It could cost as much as $550 to have a bottle of Windex removed from the property by one of these professionals, he said, compared to a fine of $5,000 if the asset manager is caught removing it. “These ordinances are popping up everywhere. In St. Paul, Minn., there is an ordinance that requires lenders to complete total repairs before it will allow an REO sale.”

Panelists discussed how important it is to make sure an REO property looks and smells inviting. Correction action should be taken on even low-value properties in order to dispose of the homes. Cary Sternberg, senior vice president, American Home Mortgage Servicing, Irving, Texas, said servicers are searching for creative and aggressive strategies to dispose of real estate-owned properties while figuring out the best way to preserve the assets.

His company saw an increase from 22,000 to 37,000 REOs in 2008. He said servicers are partnering up with preservation vendors to update the carpet, paint, and if needed, replace the roof on a particular home, in order to make sure it is in “lendable condition” before someone can qualify for a loan. He said third-party sales are becoming more popular to move REO. He said he is not sure about the chance of rental type programs succeeding, because the lender is not set up to be a landlord.

Caroline Reaves, president and chief operating officer, Mortgage Contracting Services, Tampa, said more mid-value and high-end properties are seeing cosmetic enhancements with furniture staging. Lenders are taking a much more active role here, she said.

The panelists also mentioned how home managers are sometimes being used to maintain the REO property and travel from house to house to occupy and maintain the property. This is happening especially on West Coast high-end properties, they said. This can help the homeowner with security issues as well as decrease marketing time, some suggested.

Michael Blair, chief operating officer of servicing, at Franklin Credit Management Corp., Jersey City, N.J., said lenders are looking into renting out foreclosed and REO properties. His company has started a pilot program with renting foreclosed homes.

“Having someone in the home is a lot better than having the property vacant,” he said. “The large concentration of REO inventory is driving the prices up for all lenders with properties sitting there empty. If you make it a rental property and make sure you add the proper amenities, you get people in to do the work, the values come back. Renting is a win-win for everybody. It helps stabilize values in neighborhoods.”



Alan Jaffa

Alan Jaffa is the chief executive officer for Safeguard, steering the company as the mortgage field services industry leader. He also serves on the board of advisors for SCG Partners, a middle-market private equity fund focused on diversifying and expanding Safeguard Properties’ business model into complimentary markets.

Alan joined Safeguard in 1995, learning the business from the ground up. He was promoted to chief operating officer in 2002, and was named CEO in May 2010. His hands-on experience has given him unique insights as a leader to innovate, improve and strengthen Safeguard’s processes to assure that the company adheres to the highest standards of quality and customer service.

Under Alan’s leadership, Safeguard has grown significantly with strategies that have included new and expanded services, technology investments that deliver higher quality and greater efficiency to clients, and strategic acquisitions. He takes a team approach to process improvement, involving staff at all levels of the organization to address issues, brainstorm solutions, and identify new and better ways to serve clients.

In 2008, Alan was recognized by Crain’s Cleveland Business in its annual “40-Under-40” profile of young leaders. He also was named a NEO Ernst & Young Entrepreneur of the Year® finalist in 2013.


Chief Operating Officer

Michael Greenbaum

Michael Greenbaum is the chief operating officer for Safeguard. Mike has been instrumental in aligning operations to become more efficient, effective, and compliant with our ever-changing industry requirements. Mike has a proven track record of excellence, partnership and collaboration at Safeguard. Under Mike’s leadership, all operational departments of Safeguard have reviewed, updated and enhanced their business processes to maximize efficiency and improve quality control.

Mike joined Safeguard in July 2010 as vice president of REO and has continued to take on additional duties and responsibilities within the organization, including the role of vice president of operations in 2013 and then COO in 2015.

Mike built his business career in supply-chain management, operations, finance and marketing. He has held senior management and executive positions with Erico, a manufacturing company in Solon, Ohio; Accel, Inc., a packaging company in Lewis Center, Ohio; and McMaster-Carr, an industrial supply company in Aurora, Ohio.

Before entering the business world, Mike served in the U.S. Army, Ordinance Branch, and specialized in supply chain management. He is a distinguished graduate of West Point (U.S. Military Academy), where he majored in quantitative economics.



Sean Reddington

Sean Reddington is the new Chief Information Officer for Safeguard Properties LLC. Sean has over 15+ years of experience in Information Services Management with a strong focus on Product and Application Management. Sean is responsible for Safeguard’s technological direction, including planning, implementation and maintaining all operational systems

Sean has a proven record of accomplishment for increasing operational efficiencies, improving customer service levels, and implementing and maintaining IT initiatives to support successful business processes.  He has provided the vision and dedicated leadership for key technologies for Fortune 100 companies, and nationally recognized consulting firms including enterprise system architecture, security, desktop and database management systems. Sean possesses strong functional and system knowledge of information security, systems and software, contracts management, budgeting, human resources and legal and related regulatory compliance.

Sean joined Safeguard Properties LLC from RenPSG Inc. which is a nationally leading Philintropic Software Platform in the Fintech space. He oversaw the organization’s technological direction including planning, implementing and maintaining the best practices that align with all corporate functions. He also provided day-to-day technology operations, enterprise security, information risk and vulnerability management, audit and compliance, security awareness and training.

Prior to RenPSG, Sean worked for DMI Consulting as a Client Success Director where he guided the delivery in a multibillion-dollar Fortune 500 enterprise client account. He was responsible for all project deliveries in terms of quality, budget and timeliness and led the team to coordinate development and definition of project scope and limitations. Sean also worked for KPMG Consulting in their Microsoft Practice and Technicolor’s Ebusiness Division where he had responsibility for application development, maintenance, and support.

Sean is a graduate of Rutgers University with a Bachelor of Arts and received his Masters in International Business from Central Michigan University. He was also a commissioned officer in the United States Air Force prior to his career in the business world.


General Counsel and Executive Vice President

Linda Erkkila, Esq.

Linda Erkkila is the general counsel and executive vice president for Safeguard and oversees the legal, human resources, training, and compliance departments. Linda’s responsibilities cover regulatory issues that impact Safeguard’s operations, risk mitigation, enterprise strategic planning, human resources and training initiatives, compliance, litigation and claims management, and mergers, acquisition and joint ventures.

Linda assures that Safeguard’s strategic initiatives align with its resources, leverage opportunities across the company, and contemplate compliance mandates. Her practice spans over 20 years, and Linda’s experience covers regulatory disclosure, corporate governance compliance, risk assessment, executive compensation, litigation management, and merger and acquisition activity. Her experience at a former Fortune 500 financial institution during the subprime crisis helped develop Linda’s pro-active approach to change management during periods of heightened regulatory scrutiny.

Linda previously served as vice president and attorney for National City Corporation, as securities and corporate governance counsel for Agilysys Inc., and as an associate at Thompson Hine LLP. She earned her JD at Cleveland-Marshall College of Law. Linda holds a degree in economics from Miami University and an MBA. In 2017, Linda was named as both a “Woman of Influence” by HousingWire and as a “Leading Lady” by MReport.


Chief Financial Officer

Joe Iafigliola

Joe Iafigliola is the Chief Financial Officer for Safeguard. Joe is responsible for the Control, Quality Assurance, Business Development, Accounting & Information Security departments, and is a Managing Director of SCG Partners, a middle-market private equity fund focused on diversifying and expanding Safeguard Properties’ business model into complimentary markets.

Joe has been in a wide variety of roles in finance, supply chain management, information systems development, and sales and marketing. His career includes senior positions with McMaster-Carr Supply Company, Newell/Rubbermaid, and Procter and Gamble.

Joe has an MBA from The Weatherhead School of Management at Case Western Reserve University, is a Certified Management Accountant (CMA), and holds a bachelor’s degree from The Ohio State University’s Honors Accounting program.


AVP, High Risk and Investor Compliance

Steve Meyer

Steve Meyer is the assistant vice president of high risk and investor compliance for Safeguard. In this role, Steve is responsible for managing our clients’ conveyance processes, Safeguard’s investor compliance team and developing our working relationships with cities and municipalities around the country. He also works directly with our clients in our many outreach efforts and he represents Safeguard at a number of industry conferences each year.

Steve joined Safeguard in 1998 as manager over the hazard claims team. He was instrumental in the development and creation of policies, procedures and operating protocol. Under Steve’s leadership, the department became one of the largest within Safeguard. In 2002, he assumed responsibility for the newly-formed high risk department, once again building its success. Steve was promoted to director over these two areas in 2007, and he was promoted to assistant vice president in 2012.

Prior to joining Safeguard, Steve spent 10 years within the insurance industry, holding a number of positions including multi-line property adjuster, branch claims supervisor, and multi-line and subrogation/litigation supervisor. Steve is a graduate of Grove City College.


AVP, Operations

Jennifer Jozity

Jennifer Jozity is the assistant vice president of operations, overseeing inspections, REO and property preservation for Safeguard. Jen ensures quality work is performed in the field and internally, to meet and exceed our clients’ expectations. Jen has demonstrated the ability to deliver consistent results in order audit and order management.  She will build upon these strengths in order to deliver this level of excellence in both REO and property preservation operations.

Jen joined Safeguard in 1997 and was promoted to director of inspections operations in 2009 and assistant vice president of inspections operations in 2012.

She graduated from Cleveland State University with a degree in business.


AVP, Finance

Jennifer Anspach

Jennifer Anspach is the assistant vice president of finance for Safeguard. She is responsible for the company’s national workforce of approximately 1,000 employees. She manages recruitment strategies, employee relations, training, personnel policies, retention, payroll and benefits programs. Additionally, Jennifer has oversight of the accounts receivable and loss functions formerly within the accounting department.

Jennifer joined the company in April 2009 as a manager of accounting and finance and a year later was promoted to director. She was named AVP of human capital in 2014. Prior to joining Safeguard, she held several management positions at OfficeMax and InkStop in both operations and finance.

Jennifer is a graduate of Youngstown State University. She was named a Crain’s Cleveland Business Archer Award finalist for HR Executive of the Year in 2017.


AVP, Application Architecture

Rick Moran

Rick Moran is the assistant vice president of application architecture for Safeguard. Rick is responsible for evolving the Safeguard IT systems. He leads the design of Safeguard’s enterprise application architecture. This includes Safeguard’s real-time integration with other systems, vendors and clients; the future upgrade roadmap for systems; and standards designed to meet availability, security, performance and goals.

Rick has been with Safeguard since 2011. During that time, he has led the system upgrades necessary to support Safeguard’s growth. In addition, Rick’s team has designed and implemented several innovative systems.

Prior to joining Safeguard, Rick was director of enterprise architecture at Revol Wireless, a privately held CDMA Wireless provider in Ohio and Indiana, and operated his own consulting firm providing services to the manufacturing, telecommunications, and energy sectors.


AVP, Technology Infrastructure and Cloud Services

Steve Machovina

Steve Machovina is the assistant vice president of technology infrastructure and cloud services for Safeguard. He is responsible for the overall management and design of Safeguard’s hybrid cloud infrastructure. He manages all technology engineering staff who support data centers, telecommunications, network, servers, storage, service monitoring, and disaster recovery.

Steve joined Safeguard in November 2013 as director of information technology operations.

Prior to joining Safeguard, Steve was vice president of information technology at Revol Wireless, a privately held wireless provider in Ohio and Indiana. He also held management positions with Northcoast PCS and Corecomm Communications, and spent nine years as a Coast Guard officer and pilot.

Steve holds a BBA in management information systems from Kent State University in Ohio and an MBA from Wayne State University in Michigan.


Assistant Vice president of Application Development

Steve Goberish

Steve Goberish, is the assistant vice president of application development for Safeguard. He is responsible for the maintenance and evolution of Safeguard’s vendor systems ensuring high-availability, security and scalability while advancing the vendor products’ capabilities and enhancing the vendor experience.

Prior to joining Safeguard, Steve was a senior technical architect and development manager at First American Title Insurance, a publicly held title insurance provider based in southern California, in addition to managing and developing applications in multiple sectors from insurance to VOIP.

Steve has a bachelor’s degree from Kent State University in Ohio.