NYCUA’s Mellin Comments on Zombie Property Law Regulations

Legislation Update
November 29, 2016

Superintendent Maria T. Vullo
New York State Department of Financial Services
One State Street
New York, NY 10004-1511

Dear Superintendent Vullo:

I am writing this letter on behalf of the New York Credit Union Association to comment on the Department of Financial Services’ regulations implementing portions of New York’s Zombie Property Law (Ch. 73, L2016 Part Q). As presently drafted, the regulation is inconsistent with the intent of the Legislature to exempt credit unions and banks that don’t do a large volume of first lien mortgage loans from abandoned property maintenance requirements, places the burden on institutions to prove they are exempt based on information that the DFS is in the best position to interpret, and imposes unnecessary reporting requirements. As financial institutions struggle to comply with a growing list of compliance mandates, I urge you to amend aspects of this regulation.

New Section 1308 of the Real Property Actions and Proceedings Law imposes substantial new requirements on mortgage servicers and originators. They must identify and monitor property that may be abandoned by following a legislatively proscribed 90 day timeline; they must follow strict requirements for notifying the public that property is being classified as abandoned; and ultimately, they must maintain abandoned and vacant property upon which they have not yet foreclosed. Institutions violating these provisions are subject to fines of up to $500 per day, per property.

No exemption for credit unions and banks was included in earlier versions of the zombie property legislation. (See, e.g. the “Abandoned Property Neighborhood Relief Act of 2016.”) This was particularly troubling to the Association since the property maintenance requirements are particularly challenging for many smaller institutions which don’t have the staff or resources necessary to monitor and maintain property on an ongoing basis. The median size credit union in New York has less than $19 million in assets and six staff persons. Mindful of these concerns, in the closing days of the legislative session, credit unions and community banks successfully lobbied to improve the legislation by exempting institutions that don’t engage in a high volume of mortgage lending. The resulting amendment is reflected in the proposed regulations as follows.

3 NYCRR 422.3 provides that:
(b) 1. For each calendar year, the obligations imposed by RPAPL 1308 shall not apply during
that calendar year to a mortgagee that is able to establish all of the following:

A. It is a state or federally chartered bank, savings bank, savings and loan association, or credit union;

B. It engages in all of the following activities during that calendar year: mortgage origination, mortgage ownership, mortgaging servicing, and mortgage maintenance; and

C. It had less than three-tenths of one percent of the total loans in the state which the mortgagee originated, owned, serviced, or maintained for the calendar year ending two years prior to the current calendar year.

It is well-settled that, “[w]hen a statute is ambiguous and requires interpretation, the construction given to the statute by an administrative agency responsible for its administration should be upheld by the courts unless the agency’s interpretation is irrational, unreasonable, or inconsistent with the governing statute.” Brown v. New York State Racing and Wagering Bd., 871 N.Y.S.2d 623, 629 (App. Div. 2d Dep’t 2009); see In re Toys “R” Us v. Silva, 89 N.Y.2d 411, 418 (1996); Trump Equitable Fifth Ave. Co. v. Gliedman, 62 N.Y.2d 539, 545 (1984) (Internal citation omitted).

In Part Q of Chapter 73 of the Laws of 2016, the Legislature set forth various mortgage foreclosure reforms and imposed new obligations on financial institutions with respect to vacant and abandoned residential real property. This legislation contains two contradictory clauses within the same provision regarding an exemption for certain financial institutions. Specifically, section one provides as follows:

For each calendar year this section shall not apply to state or federally chartered banks, savings banks, savings and loan associations, or credit unions which: (1) originate, own, service and maintain their mortgages or a portion thereof; and (2) have less than three-tenths of one percent of the total loans in the state which they either originate, own, service, or maintain for the calendar year ending December thirty-first of the calendar year ending two years prior to the current calendar year.

This provision is ambiguous on its face. In the first instance, it states that the exemption applies to institutions that originate, own, service, and (conjunctive) maintain at least some of their mortgages. At the same time, it states that, to be exempt, an entity must also originate, own, service, or (disjunctive) maintain less than the threshold number of loans. As written, it would seem that virtually zero financial institutions would fall within the exemption.

This problem can be easily addressed by amending 422.3(B) as follows;

“B. It engages in {all} any of the following activities during that calendar year: mortgage origination, mortgage ownership, mortgaging servicing, and mortgage maintenance…”

The burden should not be placed on financial institutions to prove they are exempt

A second problem with the regulation is that it places the burden on individual financial institutions to prove they are exempt. As the government body responsible for implementing and interpreting this legislation, the DFS is in a much better position than individual credit unions to determine who must comply with the regulation. Most importantly, the regulation provides that the DFS provides by November 15th a “Total Number of Residential Real Property Mortgages Originated in the State During the Calendar Year Ending Two Years Prior To the Current Calendar Year” as determined by the Superintendent. However, this is not all the information financial institutions will need to know in order to prove their exempt status. The statue stipulates that institutions which originate more than three-tenths of one percent of the total loans in the state in which they originate, own, service, or maintain for the calendar year ending December 31st of the calendar year ending two years prior must comply with the statute. Without further clarification in the final regulations, credit unions will have to individually categorize loans that they originate, service and maintain to determine they qualify for the exemption.

At the very least, the final regulation has to provide a detailed explanation as to how financial institutions are to calculate the number of applicable loans. If this is not done, the DFS will be faced with a flood of exemption requests from financial institutions on how best to interpret the regulation.

If the DFS is unwilling to make this change, it should consider postponing the date by which it must be complied with. There are substantial operational issues with which nonexempt credit unions must comply. Coupled with the continued confusion over how the statute should be interpreted, a delay in implementing this regulation makes sense for both the DFS and impacted institutions, particularly since the Department was unable to provide the necessary information by November 15.

A third issue that needs to be addressed in the final regulation deals with preemption. New Real Property Actions and Proceedings Law 1308(13) preempts local Zombie Property requirements. It provides that “No local law, ordinance, or resolution shall impose a duty to maintain vacant and abandoned property… in a manner inconsistent with the provisions of this section.” Given the number of local laws, the regulation should be incorporated into the final draft of the regulations so that there is no doubt that mortgagees must only comply with one set of requirements. This will in no way diminish the authority of localities to police their vacant property. The legislation gives localities the authority to independently enforce the 1308 requirements.

Finally, the reporting requirements are duplicative. Both the statue and regulation require mortgagees to report abandoned property to the Department of Financial Services. There is no requirement to report on abandoned property on a quarterly basis. There are more than enough oversight mechanisms to ensure compliance with this law, ranging from steep fines and municipal oversight to the incentive to treat property as abandoned for foreclosure purposes.

I appreciate the fact that the DFS has been willing to listen to the concerns of the Association as it finalizes this regulation and hope to continue to have an ongoing dialogue about this issue as compliance issues arise. The Association recognizes that abandoned property is a top legislative priority and that zombie property has to be dealt with more effectively than it has been over the last several years. The suggestions that I have made will ensure that those institutions in the best position to deal with abandoned property are responsible for doing so without having the unintended consequence of making it even more difficult for smaller institutions to provide mortgage loans to their members.


William J. Mellin
New York Credit Union Association

Soure: NYCUA



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.