Page 225 – Safeguard Properties

On Monday, the Five Star Conference began with the third Single-Family Rental (SFR) & Investment Roundtable, a hyper-focused event that allowed attendees to learn more about the available opportunities that can help SFR investors meet their objectives. Attendees also heard valuable insights from industry experts on how they could continue to meet their performance objectives by partnering with the right investors and lenders.

The day-long event saw expert panels give insights into rehab, acquisition, funding, market overview, due diligence, and technology innovations in SFR.

Opening the proceedings, Jeffrey Tesch, CEO, RCN Capital and the Event Director for the Roundtable, said that the U.S. currently has the highest rate of investment since 1999; 11% of all investment properties are bought by single-family investors.

“This is truly monumental. It’s amazing how far we’ve come in a short time,” Tesch said.

The first session—titled, “Latest and Greatest: Cutting-Edge Lending Strategies for SFR & Investment Markets,” and moderated by Tesch—focused on the options and instruments available for investors to improve their return on investment (ROI). The session featured Glen Mather, CEO, NuView IRA; Alex Offutt, Managing Director, Constructive Loans; Chase Scott, Head of Servicing and Asset Management, LendingHome; and Dennis Spivey, VP, CoreVest Finance, all of whom gave insights into new lending products and financing strategies that could be the best fit for an SFR investor.

“Single-family rental has transformed over the past few years moving from large corporations to small investors with a minimal number of properties,” Spivey said, explaining how this market has now become available to every investor.

“A lot of it in this particular space is more of a knowledge share, so if you could create what we mentioned [during the panel] was a membership profile so you don’t have to underwrite, it allows [the borrowing process] to be more seamless on the upfront,” Scott suggested.

During the session on asset rehab strategies, moderated by Rebecca McLean, Executive Director of National REIA and featuring John Gordon, Director National Accounts, Home Depot Pro; Kevin Jonas, SVP, Bayview Loan Servicing; and Bill McGee, VP Sales & Strategic Partnerships, Alacrity Services, the panel discussed why smart rehab was key to effective SFR investments and the best, cost-effective strategies to increase the value of a property.

Martin Kay, Founder & CEO, Entera, turned the spotlight on the evolution of residential real estate and how technology like big data was changing the future of homebuying.

The next session dived deep into due diligence and its importance in SFR investments. Moderated by Lori Eshoo, President & CEO, National Tax Search, the panel consisting of Rob Dewald, Co-Founder & CEO, Precedent Management; Lee Rogers, President, realprotect; and Brandon Winters, CEO, eMerge Property Solutions. Together, they gave insights into the factors that can affect the value of a transaction, as well as the potential impact of HOAs, insurance, property tax, and valuation.

In “Bringing in Help,” moderator Charles Tassell, COO, NREIA, along with his fellow panelists Aaron DiCaprio, CEO, Rent Rescue; Scott Heimel, VP, Property Frameworks; and Tucker McDermott, VP of Sales, Real Estate, SMS Assist, then delved into the factors and trends that SFR investors must consider before they bring in outside property managers.

“If you want to scale as an entrepreneur, you better have third-party management. That’s first and foremost,” Tassell said during the event. “After that are some very specific questions to ask.” The panel covered factors such as cost, background, and certifications.

“When it comes to third-party management, know what you actually need,” he added.

Stuart DenyerIn an afternoon keynote, Stuart Denyer, CEO, Sherman Bridge Lending, took the audience through the fundamentals of the housing market and how they can impact an investor’s bottom line. He also focused on the trends that were likely to impact the SFR market in particular and the steps that investors should take to adapt to changing market conditions.

“Everyone in this section of the industry needs to stay aware of changing horizons,” Denyer said. “The whole market is changing. The way business is done and handled is all moving quickly, and it’s important to stay as up-to-date as possible.”

Next, a session on tech innovations was moderated by Zach Bassett, VP, Field Operations, Property Masters, and featured Inaas Arabi, VP of Single-Family, General Manager, Propertyware; Jeff Cline, Executive Director – Principal, SVN; and Tim Rath, AVP, Business Development & Marketing, Safeguard Properties. The panel discussed the technology that is available for entry-level investors and how it can support the growth of their portfolio.

Zach Bassett’s biggest takeaway from the panel was the availability of ways to increase productivity.

“Obviously the technology is helping with everyone’s productivity, but at the end of the day we still need humans,” Bassett said. “It’s great because we can keep our jobs, but we couldn’t be near as successful with paper maps and landlines.”

The day ended with a panel discussion on how investors can adapt to a changing environment. The session was moderated by Johnny Pannell, Senior Advisor, Enterprise Sales Manager, 5arch and featured and Lou Brown, CEO, Certified Affordable Housing Provider; Chris Clothier, Partner & VP of Sales & Marketing, Memphis Invest; Bryan McLain, Founder & CEO, McLain Companies; and Josh McLeod, VP, American Homes 4 Rent.

Star Sponsorship for the Single-Family Rental and Investment Roundtable was provided by CoreVest Finance, Home Depot Renovation Services, and RCN Capital. Corporate Sponsoship for the event was provided by Ark Forecast, Certified Affordable Housing Provider, Constructive, eMerge Property Solutions, Globus, Memphis Invest, Property Frameworks, Property Masters, and Rent Rescue.

HUD: FHA INFO #19-48: HECM Policy Updates

Posted on September 26, 2019 by Safeguard

Investor Update
September 23, 2019

Source: HUD

The Federal Housing Administration today published multiple policy updates to its Home Equity Conversion Mortgage (HECM) program. Today’s updates include the HECM Mortgagee Optional Election (MOE) Assignment Options for non-borrowing spouses and the continuation of the HECM collateral risk assignment requirements. See below for details.

FHA Issues Updated Guidance on Home Equity Conversion Mortgage (HECM) Mortgagee Optional Election Assignment Options

Today, under the Reverse Mortgage Stabilization Act (RMSA) authority, the Federal Housing Administration (FHA) issued Mortgagee Letter (ML) 2019-15, Updates to Mortgagee Optional Election (MOE) Assignment for Home Equity Conversion Mortgages (HECMs) with FHA case numbers assigned prior to August 4, 2014. This ML — in addition to providing updated guidance — eliminates all interim deadlines for MOE Assignments that were outlined in ML 2015-15 for HECM case numbers issued prior to August 4, 2014.

Since implementation of the MOE Assignment process outlined in ML 2015-15, FHA has found that several of its requirements obstructed mortgagees’ election of the assignment option. To address these issues, and to improve the fiscal safety and soundness of the HECM program, FHA is modifying the requirements for HECM MOE Assignment claims by:

• Eliminating the interim MOE Assignment election and assessment deadlines, along with associated notification requirements;
• Eliminating the 120-day timeframe for bringing current all property charges on a HECM loan that is subject to a pre-existing loss mitigation repayment plan;
• Establishing a 180-day reasonable diligence timeframe to initiate an MOE Assignment;
• Eliminating the requirement for an eligible surviving non-borrowing spouse to obtain good and marketable title to the property that secured the HECM or demonstrate the legal right to reside in the property for life, and modification of related certifications and assignment criteria;
• Updating the definition of eligible non-borrowing spouse; and
• Requiring mortgagees to request information from borrowers to attempt to identify non-borrowing spouses.

To view full update, please click the source link above.

VA: VALERI Special Announcement

Posted on September 26, 2019September 26, 2019 by Safeguard

Investor Update
September 26, 2019

Source: VA

The VALERI application will be unavailable on Friday, September 27, 2019, from 9:00 PM EST until Sunday, September 29, 2019, 11:59 PM EST for a system deployment. Please refrain from using the application during this time.

The deployment will include the following items:

• Launches the Review Post Audit Claim, Incentive, and Partial Release of Security process. The Post Audit Selection and Status report will be available on October 1, 2019. A list of required documents by post audit type is linked here and available in VALERI under Knowledge.

• Enables servicers to submit pre-approval requests in the Servicer Web Portal (SWP). Submission of the request notifies the assigned technician on the loan to review the pre-approval request. The Pre-Approval Status Report will be available after October 31, 2019.

• Enables servicers to appeal a Post Audit decision in SWP, via the Review Appealed Post-Audit Claim or Incentive process.

• Corrects a gap in the Supplemental Claim logic to include additional days of interest granted on previous Appeal Claims to be copied into the Supplemental Claim.

• Resolves an issue with monthly Delinquency Status Update (DSU) event generation that would miss a month under certain date conditions.

• Updates the logic in the Default Resolution Rate (DRR) Report to exclude rejected, withdrawn, and cancelled events.

If there are any questions, please feel free to contact the VALERI Help Desk at VALERIHELPDESK.VBACO@va.gov.

Thank you for your cooperation.

VALERI Helpdesk
VA Central Office Loan Management

FHFA: New Strategic Plan and Scorecard for Fannie Mae and Freddie Mac

Posted on September 26, 2019November 1, 2019 by Safeguard

Investor Update
October 28, 2019

Source: FHFA

Washington, D.C. – The Federal Housing Finance Agency (FHFA) today released a new Strategic Plan for the Conservatorships of Fannie Mae and Freddie Mac and a new 2020 Scorecard for Fannie Mae, Freddie Mac, and Common Securitization Solutions. The Strategic Plan provides a framework for how FHFA will guide Fannie Mae and Freddie Mac (the Enterprises) to fulfill their statutory missions, focus on safety and soundness, and prepare for a responsible end to the conservatorships. The Scorecard aligns the Strategic Plan with the Enterprises’ tactical priorities and operations, serving as an essential tool to hold the Enterprises accountable for the effective implementation of the Strategic Plan.

“Our nation’s mortgage finance system is in urgent need of reform,” said FHFA Director Mark Calabria. “The vision for reform articulated in the Strategic Plan and advanced in the Scorecard will serve borrowers and renters by preserving mortgage credit availability, protect taxpayers by ensuring Fannie Mae and Freddie Mac can withstand an economic downturn, and support a strong and resilient secondary mortgage market.”

The three objectives of this new Strategic Plan and Scorecard are to ensure that the Enterprises:

1. Focus on their core mission responsibilities to foster competitive, liquid, efficient, and resilient (CLEAR) national housing finance markets that support sustainable homeownership and affordable rental housing;

2. Operate in a safe and sound manner appropriate for entities in conservatorship; and

3. Prepare for their eventual exits from the conservatorships.

Links to: 2019 Strategic Plan for the Conservatorships of Fannie Mae and Freddie Mac and 2020 Scorecard for Fannie, Mae, Freddie Mac, and Common Securitization Solutions

CFPB: Policies to Facilitate Compliance and Promote Innovation Issued

Posted on September 26, 2019September 26, 2019 by Safeguard

Industry Update
September 10, 2019

Source: CFPB

First No-Action Letter Issued to HUD Housing Counseling Agencies

WASHINGTON, D.C. – The Consumer Financial Protection Bureau (Bureau) today issued three new policies to promote innovation and facilitate compliance: the No-Action Letter (NAL) Policy, Trial Disclosure Program (TDP) Policy, and Compliance Assistance Sandbox (CAS) Policy. The Bureau proposed the policies in 2018 and received public comments on each from a diverse array of stakeholders.

Regulatory uncertainty can hinder the development of innovative products and services that benefit consumers. NALs provide increased regulatory certainty through a statement that the Bureau will not bring a supervisory or enforcement action against a company for providing a product or service under certain facts and circumstances. The new NAL Policy improves on the Bureau’s 2016 NAL Policy by having, among other things, a more streamlined review process focusing on the consumer benefits and risks of the product or service in question.

The Bureau today issued its first NAL under the new NAL Policy in response to a request by the Department of Housing and Urban Development (HUD) on behalf of more than 1,600 housing counseling agencies (HCAs) that participate in HUD’s housing counseling program. In 2018, HUD brought concerns to the Bureau about HCAs and lenders not entering into agreements that would fund counseling services due to uncertainty about the application of the Real Estate Settlement Procedures Act (RESPA). Expressing similar concerns, the Coalition of HUD Intermediaries filed a comment letter in February 2019 noting the insufficiency of the Bureau’s old NAL Policy and supporting the new NAL proposed policy. The no-action letter essentially states that the Bureau will not take supervisory or enforcement action under RESPA against HUD-certified HCAs that have entered into certain fee-for-service arrangements with lenders for pre-purchase housing counseling services. The NAL, which is an exercise of the Bureau’s supervisory and enforcement discretion, is intended to facilitate HCAs entering into such agreements with lenders and will enhance the ability of housing counseling agencies to obtain funding from additional sources.

Under the new TDP Policy, entities seeking to improve consumer disclosures may conduct in-market testing of alternative disclosures for a limited time upon permission by the Bureau. The Dodd-Frank Act gives the Bureau the authority to provide certain legal protections for entities to conduct trial disclosure programs, as outlined in the TDP Policy. The new policy streamlines the application and review process.

The CAS Policy enables testing of a financial product or service where there is regulatory uncertainty. After the Bureau evaluates the product or service for compliance with relevant law, an approved applicant that complies in good faith with the terms of the approval will have a “safe harbor” from liability for specified conduct during the testing period. Approvals under the CAS Policy will provide protection from liability under the Truth in Lending Act, the Electronic Fund Transfer Act, or the Equal Credit Opportunity Act.

“Innovation drives competition, which can lower prices and offer consumers more and better products and services. New products and services can expand financial options, especially to unbanked and underbanked households, giving more consumers access to the benefits of the financial system. The three policies we are announcing today are common-sense policies that will foster innovation that ultimately benefits consumers.” said Consumer Financial Protection Bureau Director Kathleen L. Kraninger.

The NAL policy can be found here: https://files.consumerfinance.gov/f/documents/cfpb_final-policy-on-no-action-letters.pdf

The CAS policy can be found here: https://files.consumerfinance.gov/f/documents/cfpb_final-policy-on-cas.pdf

The TDP policy can be found here: https://files.consumerfinance.gov/f/documents/cfpb_final-policy-to-encourage-tdp.pdf

The HUD NAL may be found here: https://files.consumerfinance.gov/f/documents/cfpb_HUD-no-action-letter.pdf

The associated HUD NAL template may be found here: https://files.consumerfinance.gov/f/documents/cfpb_HUD-no-action-letter-template.pdf

The associated HUD NAL application may be found here: https://files.consumerfinance.gov/f/documents/cfpb_HUD-no-action-letter-application.pd

CFPB: Executive Team Additions Announced

Posted on September 26, 2019 by Safeguard

Industry Update
September 25, 2019

Source: CFPB

WASHINGTON, D.C. — The Consumer Financial Protection Bureau (Bureau) today announced the following additions to its executive team:

Desmond Brown will serve as the Deputy Associate Director for the Consumer Education and Engagement Division. Mr. Brown has more than two decades of experience working with national and local organizations to increase financial well-being and economic opportunities for consumers. He first joined the Bureau as a program specialist for the Office of Financial Empowerment in 2012. He earned his Masters of Policy Management from Georgetown University, and his B.S. in Political Science from Southern Connecticut State University.

Jason Brown will serve as Assistant Director for Research. Mr. Brown has 16 years of Federal service, most recently as Associate Commissioner in Office of Research, Evaluation, and Statistics at the Social Security Administration. Prior to this appointment he served in numerous capacities as an economist at the Department of the Treasury. Mr. Brown earned his B.A. in Economics from Texas A&M University and Ph.D. in Economics from Stanford University.

Karla Carnemark will serve as the Deputy Chief of Staff. Ms. Carnemark joins the Bureau with more than 20 years of experience in public service, project management and government affairs. She has worked with senior-level government executives from the U.S. Department of Defense, U.S. Department of Commerce and the U.S. Department of Transportation. Ms. Carnemark also served on Capitol Hill on the staff of Rep. Deborah Pryce (OH). Ms. Carnemark received her B.A. from Lynchburg College.

Ren Essene will serve as Chief Data Officer. Ms. Essene has served at the Bureau in a number of capacities since 2011. She previously worked at the Federal Reserve, and her career in information management and housing issues spans over 25 years. Ms. Essene earned her B.S. in Architecture from the University of Illinois at Urbana-Champaign and M.P.A. from the Kennedy School of Government at Harvard University.

Bryan A. Schneider will serve as Associate Director in the Supervision, Enforcement and Fair Lending Division. Mr. Schneider most recently served as the Secretary of the Illinois Department of Financial and Professional Regulation, a cabinet-level agency. He worked for the Walgreen Co. for 15 years in numerous capacities, from divisional vice president and assistant general counsel to senior attorney. Mr. Schneider earned his B.S. in Accounting from Trine University, his M.B.A. from DePaul University and J.D. from the University of Wisconsin Law School.

Dispose Distress Early to Minimize Loss Severity

Posted on September 26, 2019 by Safeguard

Industry Alert
September 17, 2019

Source: HousingWire

A new study of distressed property dispositions between 2003 and 2017 by Fannie Mae and academic researchers finds loss severity on nonperforming loans is lower when properties are disposed of early, before a lender takes ownership.

“Losses tend to be lower when the lender does not take ownership of the property,” according to early findings from the study provided by Hamilton Fout, director of Economics for Economic and Strategic Research at Fannie Mae. “The earlier the creditor is able to dispose of the property the less they lose because of better maintenance of the property, for example.”

Fout and study co-authors Arnab Biswas with the University of Wisconsin Stout and Anthony Pennington-Cross with Marquette are also working on publishing a paper that will provide a more in-depth treatment of findings from the study to shed light on an area of loan servicing that has not been well-explored in academic literature, according to Fout.

“There is not a great understanding about what’s driving severity,” he said. “Loss mitigation strategy matters.”

REOs experience biggest losses

The specific distressed property disposition strategies analyzed in the study were short sales (SS), deeds-in-lieu of foreclosure in which the distressed owner deeds the property directly to the lender (DIL), third-party sales at foreclosure auction (TPS), and sales of real estate owned by the lender (REO).

To measure loss severity, Fout and his co-authors looked at record-level default data from Fannie Mae between 2003 and 2017 for which a disposition outcome was available. The loss severity calculation accounted for all disposition-related costs incurred by Fannie such as foreclosure costs, property maintenance costs, sales costs and interest carrying costs. These combined costs were subtracted from the property sale proceeds and then divided by the outstanding mortgage balance at the time of default.

This initial loss severity calculation found that loss severity was highest for REO dispositions (63 percent) followed by deeds-in-lieu (60 percent), short sales (46 percent), and finally third-party sales at foreclosure auction (32 percent). Fout and his co-authors dug beyond those initial findings, however, taking steps to control for factors that may have influenced the results. These factors included loan type, loan-to-value ratio, borrower credit score and debt-to-income ratio, as well as a property’s owner-occupancy status.

“Controlling for borrower, loan and market characteristics, as well as sample selection, we find that REO loans experience the greatest losses followed by TPS, SS and DIL,” the study concluded.

For full article, please click the source link above.

FEMA Declared Disaster South Dakota

Posted on September 25, 2019 by Safeguard

FEMA Alert
September 23, 2019

FEMA issued a Presidential Major Disaster Declaration for areas in South Dakota affected by severe storms and flooding that took place May 26 to June 7, 2019.

The following counties are eligible for assistance:

Public Assistance

Aurora
Bennett
Brule
Butte
Campbell
Custer
Deuel
Fall River
Gregory
Haakon
Hamlin
Hanson
Jackson

Jones
Lyman
Meade
Mellette
Pennington
Sanborn
Todd
Tripp
Turner
Union
Walworth
Ziebach

Please be advised of the following tribal areas eligible for Public Assistance:

Cheyenne River Indian Reservation (Dewey, Haakon, Meade, Stanley, Ziebach counties)
Rosebud Indian Reservation (Gregory, Lyman, Mellette, Todd, Tripp counties)

South Dakota Severe Storms And Flooding (DR-4463)

FEMA Declared Disaster South Dakota: ZIP Code List

Additional Resources

FEMA’s web site

FEMA’s Disaster Declaration Process

Safeguard Properties Industry Alerts

HUD Moratorium on Foreclosure

VA’s Policy Regarding Natural Disasters

Freddie Mac Disaster Relief Policies

Fannie Mae’s Natural Disaster Relief Policies

FEMA Declared Disaster Illinois

Posted on September 23, 2019November 1, 2019 by Safeguard

FEMA Alert Update
October 24, 2019

FEMA issued an update to a Presidential Major Disaster Declaration for areas in Illinois affected by severe storms and flooding that took place February 24 to July 3, 2019.

The following county is eligible for assistance:

Public Assistance

Illinois Severe Storms And Flooding (DR-4461): Amendment 1

FEMA Declared Disaster Illinois: ZIP Code List

FEMA Alert
September 19, 2019

FEMA issued a Presidential Major Disaster Declaration for areas in Illinois affected by severe storms and flooding that took place February 24 to July 3, 2019.

The following counties are eligible for assistance:

Public Assistance