Page 262 – Safeguard Properties

George Mehok Comments on Technology in Disaster-Affected Areas

Posted on September 13, 2018October 29, 2018 by Safeguard

On January 28, National Mortgage News published an article titled Even with Few Quakes, Servicers Shaking. In it, Safeguard’s George Meehok, chief information officer, comments on the role of technology used by field services companies in areas affected by natural disasters.

Even with Few Quakes, Servicers Shaking

WE’RE HEARING that the housing bust isn’t the only thing driving an increase in demand for “field services” like home inspections and maintenance in recent years. Natural disasters, including Hurricane Sandy, also have mortgage servicers scrambling to check on the status of their collateral.

Natural disasters caused more than $60 billion in property damage during 2012, according to CoreLogic. Some estimates have put the property damage from Hurricane Sandy alone at more than $50 billion. (EQECAT, a provider of catastrophe loss modeling services, pegs insured losses from Sandy at between $10 billion and $20 billion.)

Just before Sandy struck, CoreLogic estimated that the Category 1 hurricane would put 284,000 residential properties on the East Coast at risk of damage. But getting a handle on either the number of properties damaged is difficult. New Jersey Gov. Chris Christie said that 346,000 homes in his state were damaged to one extent or another, while 41,000 New Jersey residents remained displaced from their damaged or destroyed homes in mid-January, nearly three months after the storm hit. That’s a big servicing portfolio, or actually a big chunk of a bunch of servicing portfolios.

And it’s not just hurricanes that pose a risk for loan collateral. A record nine million acres were consumed by wildfires during 2012 across the U.S., mostly in Western and Southern states. And a widespread drought in the West and Midwest is estimated to diminish economic growth by $75 billion to $150 billion, shaving between .5% and 1% off of GDP growth. While the drought doesn’t damage property value, a prolonged drought could depress values for farm and ranch land in affected areas.

All that during a year when the country was spared the severity of tornadoes seen in 2011 and did not suffer as much inland, fresh-water flooding as in some recent years. There were also few domestic earthquakes that affected heavily populated areas.

Bad news, of course, sometimes turns into big business for companies that help mortgage servicers manage and monitor collateral and real estate owned assets. So where do servicers turn to find out how much of their collateral has been damaged by a natural disaster and how severe is the damage? The same people they rely on when a borrower defaults on a loan, it turns out: field services companies. And advances in geo-coding technology are making it easier for lenders and their service providers to pinpoint what collateral might be affected when Mother Nature turns mean.

George Mehok, chief information officer at Safeguard Properties, said identifying what properties a client has in areas affected by a disaster and assessing the damage for them is a cornerstone of Safeguard’s business. In many cases, borrowers are still current on their mortgage in the immediate aftermath of a disaster, but the servicer still wants to know what the condition of the collateral is.

“We are the boots on the ground for our clients,” he said.

He said technology from companies such as Google to identify the geographical location of properties is improving, but at this point it isn’t always reliable enough to ensure that inspectors or maintenance crews are at the right home. As a result, Safeguard has employed its own technology and logic in its quality control processes to identify the location of properties.

When a disaster occurs, he said Safeguard can quickly and accurately inform the servicer of what assets may have been damaged. The client can then decide if they want to order inspections or other field services related to those homes. In many cases, servicers want a “FEMA inspection” so they have a better understanding of how their portfolio is affected. While big national disasters like Sandy won’t escape a servicer’s attention, smaller disasters like a local tornado or localized flooding may not even be on a lender’s radar until a field services provider alerts them to the fact that they have collateral in an area affected by a local disaster.

“We can actually tell them where the affected areas are, and we give them a list of all their properties that are in that area,” Mehok said.

But defaults remain the largest source of the field services visits. Marc Hinkle, an SVP at Mortgage Contracting Services, told me that more than 90% of the company’s business is related to loan defaults. Still, when a disaster strikes he said servicing clients want to know what REO or foreclosed property they have in the affected area.

And he said field inspectors can play an important role in helping servicers make sure that insurable claims are handled correctly. In the wake of a hurricane, for instance, there are often questions about whether damage was caused by wind or water, which affects what insurance covers the damage. Real-time photos or video delivered from tablet devices can help servicers manage insurance claims in those cases, he said.

Evaluating damage in the immediate aftermath of a disaster is the first concern of servicers, but in assessing the health of their portfolio, they also need to think about the long-term ramifications as well. A major storm, flood or earthquake can sometimes not only put pending home sales in limbo, but it can depress property values in areas suddenly deemed risky for years to come.

The degree to which a disaster dampens values depends on a long-term basis depends upon the nature of the disaster and how it affects people’s perception of risk. For servicers, a disaster on the scale of Hurricane Sandy may be a factor affecting their delinquency rates for years to come. In the aftermath of Hurricane Katrina, the real estate market in lower elevation parts of New Orleans and the surrounding area remained depressed for years.

Ted Cornwell has covered the mortgage markets since 1990. He is a former editor of both Mortgage Servicing News and Mortgage Technology.

To view the online article, please click here.

About Safeguard
Safeguard Properties is the largest mortgage field services company in the U.S. Founded in 1990 by Robert Klein and based in Valley View, Ohio, the company inspects and maintains defaulted and foreclosed properties for mortgage servicers, lenders, and other financial institutions. Safeguard employs approximately 1,700 people, in addition to a network of thousands of contractors nationally. Website: www.safeguardproperties.com.

George Mehok Awarded “CIO of the Year” by Crain’s

Posted on September 13, 2018October 29, 2018 by Safeguard

On April 18, Crain’s Cleveland Business names George Mehok, CIO of the Year in the large, private company category. Mehok is Safeguard’s chief information officer.

CIO of the Year George Mehok

A company that nearly doubles in size in less than a year and is the largest mortgage field services firm in the United States relies heavily on its information technology.

Just ask George Mehok, CIO of Safeguard Properties — the Valley View firm that grew from 1,000 employees in August 2012 to 1,700 by February 2013.

The company manages properties that are held by a mortgage holder, usually because of foreclosure. It must inspect and maintain the properties of its clients until they are resold.

Since August 2011, keeping Safeguard’s IT systems running has been the responsibility of Mr. Mehok. In that time, he has helped to devise and deploy a strategy that both accommodates the growth and allows Safeguard to seamlessly scale the business as it expands and diversifies.

“With the growth that Safeguard has experienced, it is also imperative to help foster an environment of trust and respect in the IT organization,” the nomination said. “By working diligently to help make an ever-expanding team gel into a cohesive unit, he has, in turn, helped build trust in the IT organization with the other leaders and users of key business groups in the organization.”

Much of Safeguard’s growth came with its purchase of the mortgage field services business of Bank of America, a deal that closed before the end of 2012. One of Mr. Mehok’s notable accomplishments was migrating the Bank of America operations into Safeguard’s, limiting the cost of using Bank of America’s legacy system.

Over the next year, Mr. Mehok will be developing a smart phone application to improve productivity in the field, since the company uses vendors and contractors across the country to maintain the properties.

In the wake of Superstorm Sandy last year, Mr. Mehok was quoted by National Mortgage News on the role Safeguard’s technology played in areas affected by natural disasters. He described how Safeguard uses technology to locate properties and assess the damage.

“We are the boots on the ground for our clients,” he told the newspaper. “We can actually tell them where the affected areas are, and we give them a list of all their properties that are in that area.”

In addition, Mr. Mehok is involved with Junior Achievement, teaches management information systems at the University of Akron and serves on the board of the Center of E-Business Technology there, advising the center on curriculum and student recruitment.

“Over his 20 years of experience in IT leadership, George has played a senior role in assisting multiple high-growth companies aspire and achieve greater productivity and efficiency through better IT processes,” the nomination said. “From helping to lead the integration efforts of the companies and technologies that power today’s smart phones, to helping to build a VC-backed wireless startup from nothing to a regional power, George has made a habit out of taking businesses from humble beginnings to pillars of operational excellence.”

To view the online article, please click here.
To view Safeguard’s official press release, please click here.

On April 18, DSNews published:
Safeguard Properties Exec Earns ‘CIO of the Year’ Award

Alan Jaffa Comments on Assets Exiting Bank Books

Posted on September 13, 2018October 29, 2018 by Safeguard

On February 18, Crain’s Cleveland Business published an article titled More Problem Assets Exit Bank Books. In it, Safeguard’s Alan Jaffa, CEO, is quoted explaining how assets may be off the bank’s books but in another entity’s portfolio.

More problem assets exit bank books

Number of foreclosed properties owned by most local financial institutions is falling

The volume of foreclosed properties owned by most local banks fell last year by double-digit percentages, in some cases by the steepest rates since the foreclosure crisis struck — a corner bankers say was turned thanks to an improving real estate market and fewer properties going into foreclosure.

Institutions big and small reported that they carried as of Dec. 31 the lowest level of foreclosed property since at least 2010, which observers say should mean fewer vacant homes in neighborhoods and more lending by banks less burdened by foreclosed assets.

“Some of the problems banks have been wrestling with for four or five years are being resolved,” said Charlie Crowley, an investment banker who works primarily with financial institutions. “It’s good for profitability, and also a sign … that more (consumers) are probably getting their debts under control.”

KeyCorp’s foreclosed assets were valued at $22 million as of Dec. 31, down 66% from $65 million at Dec. 31, 2011, and down 83% from $129 million at Dec. 31, 2010, according to public filings.

Others shedding problem assets include regional giant Columbus-based Huntington Bancshares Inc., which reduced its portfolio by 27% in 2012 and by 42% in 2011, and tiny Middlefield Banc Corp., which trimmed its foreclosed assets by 16% last year.

Similar improvement during 2012 was reported by LNB Bancorp Inc. and Cincinnati-based Fifth Third Bancorp, according to data from SNL Financial.

“Overall, the (real estate) market has stabilized,” said Dale Clayton, senior vice president and national manager of the asset recovery group for KeyBank. “We still have consumer mortgages (in foreclosure) … that will continue to be higher than average until employment rates improve, (but) our bank is pretty much through the real estate crisis.”

One exception is PNC Financial Services Group Inc., which acquired Cleveland-based National City Corp. in 2008: Its line item for “other real estate owned” — or OREO, the term for foreclosures in bank filings — has increased every year since 2007 and stood at $920 million at Dec. 31, 2012, up 5% from $876 million as of Dec. 31, 2011, and up 10% from $835 million as of Dec. 31, 2010, SNL reported.

Industrywide, aggregate OREO stood at $38.5 billion as of Dec. 31, 2012, down 16% from $46 billion the year before and down 27% from $52.6 billion as of Dec. 31, 2010, according to SNL.

Investors pounce

The industrywide decline in OREO portfolios largely is the result of the improving housing market, which observers say is firming up housing prices and increasing sales.

“This has been mostly a real estate-led recovery as opposed to a jobs-based recovery,” said Tim O’Dell, CEO of Central Federal Corp., the Fairlawn parent company of CFBank.

Although the company hasn’t reported its year-end numbers for 2012, Central Federal’s foreclosed assets fell 47% to $2.4 million on Dec. 31, 2011, from $4.5 million as of Dec. 31, 2010.

When banks foreclose on properties, they write them down to appraised levels, said Mr. Crowley, a Cleveland managing director for Philadelphia-based Boenning & Scattergood Inc. In recent years, there were not always buyers of the properties even at those levels, and banks “were reluctant in many cases to recognize steeper losses than they had already taken,” which would have happened had they sold properties below their appraised values, Mr. Crowley said.

And if the banks’ capital levels were stretched, they were even less inclined to take bigger hits by selling properties, he noted.

“Now that the real estate market has recovered somewhat, it is much easier for these banks to sell OREO properties without significant additional losses,” Mr. Crowley said. “Also, as the banks have boosted their capital levels over the last couple of years, they are able to tolerate additional losses in some cases just to get rid of problems.”

Mr. O’Dell agreed that buyers had been scarce.

“There were times that, even if you were willing to sell a property at a significant discount, there just weren’t many buyers out there,” he said. “We have seen the return of interested buyers in these properties. It gives us confidence to go out and make new loans.”

KeyBank’s Mr. Clayton said there is “significant capital in the market that continues to chase distressed real estate assets.” When investors are buying up more distressed loans and commercial notes, fewer of those distressed assets end up in foreclosure, Mr. Clayton said.

“Lenders, not developers’

Fewer foreclosed assets on their books saves banks money, as foreclosed properties are expensive to own, Mr. Clayton said. The average lifetime cost to hold and sell such assets, Mr. Clayton estimated, is 10% to 12% of their value.

A bank’s costs include the hiring of property managers and the engagement of brokers to sell properties; all the while, the foreclosed assets aren’t earning the interest they were supposed to glean.

A number of institutions noted in their earnings releases last month that their noninterest income increased, in part, because their costs associated with “other real estate owned” had decreased.

“We’re not really good owners of real estate,” Mr. Clayton said. “We’re lenders, not developers.”

KeyCorp’s other real estate owned portfolio now is at a normalized level, Mr. Clayton said, and that returns capital to the bank for other uses, such as lending.

It also means a cut to the related work force: KeyCorp’s full-time-equivalent workout employees — or those who modify and manage nonperforming assets — are down two-thirds from the staff’s height in 2009 and 2010, Mr. Clayton said. Some of those employees are commercial lenders who now have returned to making loans.

“The struggle now is how do you reduce staff as quickly as you reduce assets and be as efficient as possible,” he said.

The decline in foreclosed properties on bank books is a very positive development, said Kevin T. Jacques, who for 14 years worked for the U.S. Department of the Treasury and now is the Boynton D. Murch Chair in Finance at Baldwin Wallace University.

“It should mean the worst of that should be over, and we can begin to start to see fewer vacant properties and a stabilization of our neighborhoods,” Dr. Jacques said.

“Is this sustainable? Depends on two things,” Dr. Jacques added. “One, how large is banks’ remaining inventory of OREO, and two, what happens to the national and regional economy in 2013?”

Off the books

Contrary to many banks’ balance sheet numbers, Safeguard Properties, a Valley View company that maintains defaulted and foreclosed properties for mortgage servicers, is not experiencing a decline in the total number of foreclosed properties and expects volumes to remain consistent for the next couple years, CEO Alan Jaffa said.

A decrease in the number of foreclosed properties on a bank’s balance sheet does not necessarily mean the property is no longer an unsold foreclosure, he wrote in an email. That’s because some properties — particularly those with government-sponsored investors and those with government-backed loans — are conveyed to those investors after a foreclosure is completed.

“The property may no longer be on the bank’s books, but may be an (OREO) in a different entity’s portfolio,” Mr. Jaffa said.

He also noted that Safeguard Properties is not seeing a decrease in default rates and in the number of properties in default 120 days or older, which Mr. Jaffa said often are “predictors of future foreclosure filings.”

To view the online article, please click here.

Safeguard’s Diverse Vendors Train Through PSBD

Posted on September 13, 2018October 4, 2018 by Safeguard

On March 5, DSNews.com published an article titled Safeguard’s Diverse Vendors Complete Training Through Partnership.

Safeguard’s Diverse Vendors Complete Training Through Partnership

Safeguard Properties announced about 250 of the company’s minority- and women-owned vendor businesses completed small business training through Partnership for Small Business Development (PSBD).

PSBD is collaboration between Safeguard, Citi, and the Foundation for Small Business Development. Through PSBD, training sessions were conducted during the past year to help women-owned and minority-owned vendors build their resources and gain exposure to new contract channels through official certification as diverse small business enterprises, Safeguard explained in a release.

The trainings were held in Chicago, Dallas, Ft. Lauderdale, Las Vegas, and Baltimore.

Valley View, Ohio-based Safeguard also reported its annual expenditures with diverse vendors– those owned by women, minorities, veterans and people with disabilities–reached more than $153.7 million last year.

“Safeguard is committed to helping its diverse vendors grow their businesses, and supporting our clients’ efforts to promote diversity as well,” said Alan Jaffa, CEO of Safeguard. “We are grateful to Citi and the Foundation for Small Business Development for creating the PSBD program so that companies like Safeguard can help their minority-owned and women-owned vendor partners.”

PSBD is also offering 400 of Safeguard’s minority- and women-owned vendors one complimentary year of certification from the Women’s Business Enterprise National Council (WBENC) and the National Minority Supplier Development Council (NSMDC). So far, about 201 vendors have been certified and 170 are currently in the process.

Safeguard’s vendor network is comprised of nearly 10,000 businesses. The company’s vendors inspect and maintain defaulted and foreclosed homes across the country.

To view the online article, please click here.

Safeguard, Forest City Joins Cleveland Nonprofits in Slavic Village Rehab

Posted on September 13, 2018October 4, 2018 by Safeguard

On March 5, Cleveland.com published an article entitled “Forest City, Safeguard Properties Join Cleveland Nonprofits to Rehab Homes in Slavic Village.”

Forest City, Safeguard Properties join Cleveland nonprofits to rehab homes in Slavic Village

CLEVELAND, Ohio — Slavic Village, the Cleveland neighborhood often called “ground zero” in the nation’s foreclosure crisis, might become the proving ground for a recovery.

A private-philanthropic partnership aims to acquire, renovate and sell or rent out 50 vacant houses in the southeastern city neighborhood this year — and could tackle hundreds more.

Called Slavic Village Recovery LLC, the new business is backed by Cleveland real estate developer Forest City Enterprises Inc.; Safeguard Properties, a Valley View company that maintains foreclosed properties for banks; and a pair of local nonprofits.

The group will focus on a 530-acre slice of Slavic Village, a community of 5 square miles and 22,500 people. Between 23 percent and 30 percent of the homes in the project area are vacant, according to data compiled by Neighborhood Progress Inc. and Slavic Village Development, the nonprofit groups.

Unlike many efforts to shore up urban housing, the Slavic Village initiative doesn’t rely on public money. Instead, the neighborhood will see private investment layered atop targeted public services, like swifter demolition, in a comprehensive rubble-to-rehab push. The partners believe their model offers the promise of profit while giving hope to communities gasping under the weight of empty houses.

Neighborhood Progress and Slavic Village Development expect to sign an operating agreement this week with Forest City and Robert Klein, Safeguard’s founder and chairman. The nonprofits each will own 10 percent of Slavic Village Recovery LLC, with the rest split between Forest City and Klein’s RIK Enterprises LLC.

Balacing civic mission, private profits

Ownership structure aside, each group will have one vote in running the project — creating what onlookers see as a balance of civic mission and profit motive.

“It’s a complicated endeavor, but it’s very simple in terms of what we’re trying to accomplish,” said Cleveland Councilman Tony Brancatelli, who represents Slavic Village. “We are really looking at market recovery in one of the hardest-hit communities in the United States.”

Slavic Village Development will identify houses that need to be razed and provide a list to the city, which will speed up demolitions knowing that private investors are waiting to move in. “We’re involved mainly in terms of trying to bring some resources from the city, to the extent we can, to the effort of dealing with nuisance properties in the neighborhood,” said Chris Warren, Cleveland’s chief of regional development.

Meanwhile, Slavic Village Recovery LLC will pinpoint houses that can be saved and acquire them from lenders, mortgage servicers or the Cuyahoga County Land Reutilization Corp., the county’s land bank.

A quasi-public entity, the land bank takes in houses after the county forecloses on delinquent property taxes and receives near-worthless properties from the U.S. Department of Housing and Urban Development and mortgage giant Fannie Mae.

Most of those structures can’t be saved. Since 2009, the land bank has demolished 201 houses in Slavic Village and has helped spur redevelopment of only 20.

With a large-scale redevelopment plan in Slavic Village, the land bank can focus more of its energy on the neighborhood, said Bill Whitney, the land bank’s chief operating officer.

Klein, who held the chief executive job at Safeguard until 2010, knows executives at the nation’s largest banks and loan servicers. And he knows what kind of scars vacant homes leave on neighborhoods. Safeguard, a beneficiary of the housing bust, inspects more than 1.8 million properties each month.

Klein believes lenders will give away those troubled houses, starting in Slavic Village, to get the burden off their books.

His goal: Get a house for free or for very little money. Invest $40,000 to $50,000 in renovations, using Safeguard’s national network of contractors to lower the cost. Then sell the house for $60,000, turning a small profit and providing affordable housing in a city neighborhood.

That’s a dramatic departure from government-driven renovations, which come with extra requirements, longer timelines and much higher price tags.

“Not that there’s not a role for the public sector, but when we keep relying on them to bail us out, it gets more and more costly because of their limitations,” said Marie Kittredge, who leads Slavic Village Development.

“Being able to rehab at scale is the only way to get ourselves back on an even playing field,” she added, noting that her organization can fix up only 20 houses a year on its own, in a neighborhood with more than 400 houses that need renovations.

Of its first 50 houses, Slavic Village Recovery LLC hopes to sell 15 and find renters for 35. The first renovations could start within months.

Testing a model for other neighborhoods

Forest City will focus on marketing, promotions and property management. Neighborhood Progress will provide the market data, digging deep into local databases of vacant, foreclosed and troubled real estate. Slavic Village Development will oversee daily operations and work with the community to encourage repairs to occupied homes and neighborhood clean-up.

“I think it’s a very interesting idea, and I’m hopeful that it’s going to work,” said Alan Mallach, a nonresident senior fellow at the Brookings Institution who has studied housing challenges in Cleveland and other cities. “What I really like is the fact that all of these people, as I understand it, are really trying to take a comprehensive approach to the area where they are working. It’s not I’ll fix up this house and I’ll fix up that house.”

There are two key questions, Mallach added. Can the Slavic Village group churn out high-quality renovations without subsidy and sell or rent the homes at a profit? And, if so, will there be enough demand to fill the houses without cannibalizing other Cleveland neighborhoods?

“We’re hopeful it will be successful, and we’re thinking about what it will be like to replicate in other neighborhoods,” said Neighborhood Progress CEO Joel Ratner, who is not related to Forest City’s Ratner family. “It’s really about restoring confidence. It’s about the psychology of it.”

Private investors across the country are buzzing about the potential of single-family rentals. Institutional investors jumped into that market last year, announcing plans to buy foreclosed properties in bulk.

But Jeff Linton, a spokesman for Forest City, said the publicly traded real estate company sees Slavic Village as more of a civic experiment than a big money-making opportunity.

Linton said Forest City, like everyone else in the real estate business, has talked about the potential of the single-family rental market. Any large-scale push into that sector would require substantial profits. But in Slavic Village, “we only expect that it will break even or at least stand on its own feet,” he said.

To view the online article, please click here.

Please click on the link for an updated story from News Channel 5:
Cleveland recovery project set to renovate 50 vacant homes in Slavic Village

About Safeguard
Safeguard Properties is the largest privately held field services company in the country. Located in Cleveland, Ohio and founded in 1990 by Robert Klein, Safeguard has grown from a regional preservation company with a few employees and a handful of contractors performing services in the Midwest, to a national company with more than 1,600 employees. Safeguard is supported by a nationwide network of subcontractors able to perform any requested superintendence, preservation, and maintenance functions, as well as numerous ancillary services in the U.S., the Virgin Islands, and Puerto Rico.

Safeguard Founder Comments on Waters’s Proposed Legislation

Posted on September 13, 2018October 4, 2018 by Safeguard

On March 22, Housingwire.com published an article titled Waters Wants Stronger Laws to Govern Foreclosure Maintenance. In it, Robert Klein, Safeguard’s founder and chairman, is quoted expressing his opinion and ideas regarding the proposed legislation.

Waters wants stronger laws to govern foreclosure maintenance

Congresswoman Maxine Waters, D-Calif., introduced legislation to prevent the deterioration of neighborhoods filled with foreclosed and abandoned properties. Property preservationists warn the legislation, while well-meaning, may not attack blight as comprehensively as a new law could.

The goal of the act is to provide funding for the rehabilitation of these neighborhoods to prevent plummeting home prices and lower quality of life for homeowners, according to Waters.

“Foreclosures are not only a tragedy for the families that lose their homes, they are a calamity for entire neighborhoods. Foreclosed properties are often boarded up, stripped, and vandalized, beginning the process of turning decent communities into blighted ones,” the congresswoman said.

She added, “Foreclosures cause housing prices to drop, hurting other homeowners as well as entire cities and towns. We should make every effort to help families avoid foreclosure – but when foreclosures occur we should do everything in our power to try to minimize more widespread, damaging effects.”

The legislation builds on the Neighborhood Stabilization Program, which was signed into law as part of the Housing and Economic Opportunity Act of 2008.

NSP has disbursed $7 billion to communities across the country, rehabilitated more than 100,000 homes and supported 93,000 jobs, the Congresswoman explained.

“NSP was designed to address a glut of abandoned and foreclosed properties across the country which devastated communities by dragging down property values, increasing municipal fire and police costs, and causing the critical loss of property tax revenue,” a release by Waters noted.

However, some market experts aren’t fully sold on the proposed legislation by Waters.

Robert Klein, founder and chairman of the board for Safeguard Properties, told HousingWire that while the bill is great in theory, it should be redefined because each distressed neighborhood is different and “there’s not a silver bullet” for all areas.

“You’re not going to rehab the properties unless you demolish what is needed. Rehab and demolition go hand in hand,” Klein said.

Additionally, Klein pointed out that land banks should be involved with the restoration of distressed neighborhoods.

Cities such as Chicago, Kansas City and Detroit have turned to land banks as a way to eliminate blight as well as repurpose vacant and abandoned properties.

“She needs to think deeper and find out why and when it [rehabilitation] should happen and, more importantly, if it should happen at all,” Klein stated.

To view the online article, please click here.

To view the official press release, please click the link:
Congresswoman Waters Introduces Project Rebuild Act of 2013

Safeguard Launches INSPI Mobile App for Inspections

Posted on September 13, 2018October 4, 2018 by Safeguard

On February 18, Housingwire published an article entitled Safeguard Properties Rolls Out Next Generation Mobile App for Inspections.

Safeguard Properties rolls out next generation mobile app for inspections

Safeguard Properties unveiled its next-generation INSPI mobile application to improve the efficiency and speed of field and insurance loss property inspections.

The new application is compatible with all mobile platforms. Workers can instantly receive and submit work orders while staying current on the inspection status.

“Our integrated mobile technology combined with advanced image handling have made it possible to vastly improve the inspections process,” said George Mehok, chief information officer for Safeguard.

With a new camera function included in the app, the process will be more visual and transparent, allowing parties to thoroughly check and inspect the premises. The new application also contains driving instructions and mapping features.

Safeguard’s latest technology is designed to help inspectors deliver quality results, while giving them the interactive tools they need to do so, said Jen Jozity, Safeguard’s assistant vice president for inspections.

To view the online article, please click here.
To view the official press release, please click here.

Russ Klein Affirms Vigorous Vendor Training is Necessary to Comply

Posted on September 13, 2018October 4, 2018 by Safeguard

The February issue of Servicing Management published an article authored by Safeguard’s Russ Klein, assistant vice president of quality assur?ance and training, entitled A New Compliance Era Requires More Vigorous Vendor Training.

A New Compliance Era Requires More Vigorous Vendor Training

Successful vendor education can help servicers avoid compliance penalties.

For the mortgage industry, non-compliance can be costly. Banks and mortgage companies routinely incur millions of dollars in fines and penalties for failure to comply with hundreds of regulatory requirements. Additionally, to minimize their risks from threats to security and business operations, companies have created their own compliance requirements to protect the security of information, personnel, facilities and other business assets.

To address not only the sheer volume of new requirements, but also stricter enforcement by regulatory agencies, banks and mortgage companies have invested heavily in dedicated compliance departments, compliance officers, risk managers and technologies to monitor, measure and maintain regulatory compliance and compliance with corporate policies. In turn, vendors and business partners serving the mortgage industry must submit to thorough audits to ensure that their processes and procedures comply with regulatory and corporate requirements as well.

The challenge for these vendors is to develop processes that cascade to their own employees and subcontractors to support their clients’ compliance and audit requirements.

For example, a national property preservation company may serve hundreds of clients, each with different requirements designed to comply with government regulations and their own business risk management practices. Serving those clients are hundreds of employees who process and verify work orders on properties in various stages of the default and foreclosure cycle, as well as thousands of contractors who perform inspection and maintenance services on properties nationwide.

To conduct their work, employees and contractors utilize desktop computers and mobile devices in order to remotely access information from their homes and other off-site locations. Security procedures must be in place around all of these, and employees and contractors must be trained to follow them.

Industry guidelines for maintaining properties vary significantly depending on the status of the property. Services that may be performed legally on a property after it has gone through a foreclosure sale and is owned by the bank are vastly different from those that may be done prior to foreclosure, when the property is still in title to the homeowner. Properties have different needs and challenges based on the neighborhoods or climates in which they are located, and local ordinances vary significantly between cities and states.

Training wheels

As a starting point, employees and contractors must undergo training to ensure that the services they deliver comply with industry guidelines, municipal and other government requirements, client specifications, and the property preservation company’s internal procedures.

But training cannot be static, because the mortgage servicing industry is not static. Industry guidelines, government regulations and local ordinances change, as do client policies and requirements.

To ensure that training evolves accordingly and that it helps maintain performance at the highest levels of quality and compliance, a sophisticated approach is essential. The availability of courses must be flexible to accommodate the unique schedules of users.

Furthermore, course offerings must be layered. Some will be required for everyone, such as those covering basic policies and security procedures, while others will be specific to the type of work a contractor or an employee performs.

Some training must incorporate classroom and online learning – though in both online and classroom venues, coaches must be available to address questions and follow-up needs.

New employees and contractors need basic training to teach them to do their jobs, and all will need refresher courses to reinforce knowledge and to provide retraining when policies, procedures and guidelines change.

Testing must be done, outcomes monitored, and improvements made to ensure that training remains relevant and that it contributes to successful outcomes in compliance and performance. Also, random checks of employees’ work and the work of contractors must be performed to ensure that quality remains consistently high.

Measuring progress

The old cliché “what doesn’t get measured doesn’t get done” is 100% accurate. If you measure performance and outcomes, you can improve them. Measurement is an essential part of the training process; it is also needed to evaluate, adapt and improve processes along the entire spectrum of services.

Client and internal scorecards must be tied to client service level agreements to maintain client satisfaction and to ensure that timely actions are taken to address issues and problems. Additionally, effective monitoring and measurement protocols must be devised to anticipate and prepare for client audits.

There is another cliché that is spot-on: “information is power.” Field service companies hold billions of pieces of data that we can harness to improve our own operational performance and efficiencies, as well as to help clients make better decisions regarding regulatory compliance and their own risk mitigation practices.

One example is utilizing data to anticipate the potential risks to a client’s property assets in certain markets and communities. By evaluating vandalism and damage trends, vendors can help mortgage servicing clients anticipate the financial impact on their portfolios as part of their asset management and property disposition planning.

By evaluating code enforcement trends in local markets, vendors can work with clients to minimize code violations and the associated fines and penalties that can result from failure to comply with local laws and ordinances.

For example, the critical partners in the data-gathering process are field service companies’ networks of vendors and contractors who collectively visit millions of properties every year. They are the eyes and ears for field service companies and their clients, with first-hand knowledge about the properties themselves, the surrounding neighborhoods, and local ordinances and requirements. By training them to gather nuggets of information, one can build and strengthen data effectively.

The results ultimately speak for themselves. When a field service company can become an effective partner with its mortgage servicing clients to deliver higher instances of “clean” compliance audits, demonstrate effectiveness at protecting the security of information, and consistently quantify improvements in its quality and performance, the entire industry benefits.

Russ Klein is assistant vice president of quality assurance and training at Safeguard Properties, based in Valley View, Ohio. He can be reached at russ.klein@safe¬guardproperties.com.

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Jennifer Jozity Discusses CFPB Compliance and Borrower Outreach

Posted on September 13, 2018October 4, 2018 by Safeguard

On February 14, Mortgage Servicing News published a blog authored by Safeguard’s Jennifer Jozity, assistant vice president of inspections, entitled Field Service Companies Help Servicers Comply with New CFPB Guidelines.

Field Service Companies Help Servicers Comply with New CFPB Guidelines

As the housing industry prepares for the implementation of the Consumer Financial Protection Bureau (CFPB) servicing guidelines effective in January 2014, a small but important area of focus for mortgage servicers will be borrower outreach.

Field service companies that inspect and maintain vacant and foreclosed properties under the guidance of servicers and investors can assist in facilitating and complying with the following new guideline:

Early intervention with delinquent borrowers. Servicers must establish or make good faith efforts to establish live contact with borrowers by the 36th day of their delinquency and promptly inform such borrowers, where appropriate, that loss mitigation options may be available. In addition, a servicer must provide a borrower a written notice with information about loss mitigation options by the 45th day of a borrower’s delinquency. The rule contains model language servicers may use for the written notice.

National field service companies employ a large network of contractors throughout the U.S. who can support borrower outreach in the process of performing routine inspections on defaulted properties.

Contractors can help disseminate information to defaulted borrowers regarding their loss mitigation options and foreclosure alternatives, and include a servicer point of contact for easy follow up.

Utilizing its network of 10,000 contractors across the country, Safeguard Properties has helped many of its mortgage servicing clients with such outreach. We have distributed materials encouraging troubled borrowers to contact their mortgage servicers for guidance. We also have helped to identify defaulted homes occupied by the families of active-duty service members and inform service members of their rights under the Servicemembers Civil Relief Act (SCRA).

In the process of providing damage assessments after major weather events, we also help disseminate servicer contact information, insurance information and other relevant communications to homeowners with property damage. National field service companies have the networks and tools in place to help their servicing clients comply with the CFPB’s new guidelines that focus on borrower outreach.

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Alan Jaffa Reflects on Continuous Improvement

Posted on September 13, 2018October 4, 2018 by Safeguard

The February issue of Mortgage Banking Magazine published an article authored by Safeguard’s CEO Alan Jaffa, entitled “Continuous Improvement.”

Continuous Improvement
How a field service company installed the self-auditing tools to continually improve performance and satisfy regulators.

Business schools and career counselors often teach and coach students and managers about the importance of “managing up” — anticipating the needs of their bosses, not only to develop more effective working relationships, but to improve outcomes for their organizations.

Managers who manage up develop good listening skills. They pay attention to the issues and challenges their bosses and their organizations face. They offer ideas and solutions to address problems. They understand organizational goals and guide their teams to deliver high-quality results and meet corporate objectives.

A similar managing-up approach applies to building effective relationships between vendors and their clients — in particular, the relationship between field service providers and their mortgage servicing clients as it relates to the servicers’ challenges in complying with myriad government regulations, as well as their own corporate risk-management requirements.

The housing crisis has sparked new and tighter regulations on an already highly regulated mortgage industry. While these regulations were designed to afford greater protections for consumers and homeowners, and address what in many communities are large volumes of vacant, defaulted and foreclosed properties, they also have created enormous administrative burdens. Servicers today must audit and document virtually every process to demonstrate compliance. Failure to do so places servicers at risk for severe penalties, fines and court fees.

Similarly, technology advances, the sophistication and proliferation of mobile communications devices and the increased risks from hackers and cyberattacks have forced companies to tighten their security policies to protect sensitive information related to their operations, as well as their employees and customers. The results of these efforts can impact everything from a company’s operation and reputation to insurance rates and stock prices.

To monitor and ensure compliance with internal policies and external regulatory requirements, companies not only audit their own processes and outcomes, but those of their vendors and suppliers. And this has never been more evident than in today’s mortgage servicing business.

Audits make us stronger

The audit process provides an opportunity for field service companies not only to manage up and help ease the compliance burden for their mortgage servicing clients, but also to strengthen their own processes and improve their own outcomes.

On a regular basis, Safeguard Properties, along with every field service company that provides property preservation services, participates in audits with their mortgage servicing clients.

Depending on the client and the need, an audit can range from providing responses to a servicer’s specific requests for information, to lengthy and comprehensive reviews of all functions and services involved in the performance of a contract. Comprehensive reviews, however, have become more common because of increased regulatory requirements and stricter regulatory scrutiny.

Under a comprehensive audit, the process usually begins with a questionnaire that the servicer sends to its field service partner. The most important areas of focus usually relate to information security and quality control. However, servicers also request information about vendor company policies and procedures, workflow management, training and recruitment, and other elements that relate to the performance of contractual services. They also may ask about a vendor’s ownership, leadership team and finances.

Along with responses to the questionnaire, field service vendors often provide dozens of exhibits to support the information provided in the questionnaire. These may include copies of information technology (IT) and security policies and procedures, process flow charts and other forms of documentation.

Site visits follow the submission of information. Again, depending on the client and the depth of the audit, one client representative or a team of four to five may spend one day or several days visiting facilities and meeting with various staff.

During these site visits, auditors seek to understand and verify the information that they have received. Information security is typically a key area of focus. To verify, for example, that borrower information is protected, auditors may ask to see relevant policies and procedures, and perform a “walk through” of the system to test the effectiveness of these policies and procedures in action and experience for themselves how secure their data is.

In responding to audits, field service vendors like Safeguard have a choice to simply provide their clients with the information they request, or to use the power of information and performance measurements to add value and quality to build a strong and lasting business partnership, and to evaluate and improve our own internal processes and systems.

For example, servicers have stringent requirements around on-time completion of work in the field. Safeguard implemented an “on-time first-time” measurement designed not only to track on-time performance, but to take a step further to minimize instances where work orders need to be reopened because of errors. It is a best practice that servicers are free to implement with their other vendors.

Information security a priority

In the past five years, Safeguard’s internal policies around information security alone have increased tenfold, from approximately 10 basic policies to more than 100 specific policies today to protect not only Safeguard’s data but our clients’ data as well. This information includes the identity of defaulted borrowers, loan numbers, property addresses, the work history on each property and the photo images that accompany each work order.

The volume and intensity of Safeguard’s policies have increased both in anticipation of our clients’ information security needs, and also in response to specific client requirements and audit points they have brought forward.

As it relates to information security, Safeguard proactively has established, evolved and formalized information security policies to provide controls around our processes for storing and protecting data, tracking and monitoring the utilization of computers and mobile devices where information is stored, and how we manage and control change orders to ensure consistency and continuity. Our policies also cover data classifications, access authority and monitoring, remote access, password requirements and data encryption.

The devastation that resulted from Hurricane Sandy late in 2012 offered a stark reminder of the importance of establishing and complying with policies and procedures to ensure business continuity and disaster recovery in the wake of business disruptions.

These include procedures for maintaining redundant systems on separate electrical grids, and maintaining business functions in multiple sites to prevent business disruptions in the event of a disaster.

After Hurricane Sandy, Safeguard found itself without electrical power for four days at its headquarters and two days at a business continuity site, and maintained business as usual at both facilities with the use of multiple backup generators with sufficient strength and capacity to support operations.

Raising the bar on partnership and business value

While quality improvement has always been embedded into Safeguard’s operations, the audit process highlighted a need for Safeguard to raise it to a new level. In the past, the function had been divided along service lines.

Two years ago, as the depth and volume of client audits grew, the company formalized the creation of a quality-assurance department that serves as the central coordinating point, not only for Safeguard’s internal quality assessment and improvement functions, but for all client audits as well. The quality-assurance department is independent of all other functions within the company, and yet is integrated with each.

The value of this independent and integrated approach is that it provides Safeguard with the ability to cross-pollenate knowledge and best practices across service lines and departments and among clients.

Central to the function, as it relates to client audits, is a documentation library that is a repository for every query, response, scorecard and audit finding. Safeguard’s quality team evaluates that information, identifies strengths and gaps, and implements plans to either share knowledge and build on strengths or improve performance — and in all cases, to measure results.

We view each audit as an opportunity to continuously raise the bar on quality outcomes — our own and those of our clients. What we learn from one client audit, we build into our processes to improve outcomes in another.

For example, in one audit, a mortgage servicing client inquired about our processes to ensure that contractors in our network carry licensing required under local laws to perform maintenance and repair services. This requirement is an important focus for government-sponsored enterprises.

Although Safeguard required each contractor to comply with all local laws and licensing, as a result of this particular audit, the company changed its internal process to formalize the requirement. Contractors in the Safeguard network now must attest annually that they are in compliance with local licensing requirements.

To verify compliance, Safeguard also conducts monthly audits of a random sampling of its network. This process change allows all Safeguard clients to demonstrate compliance on this point to their investors.

As another example, many of Safeguard’s mortgage servicing clients follow audit and reporting standards under the Statement on Standards for Attestation Engagements (SSAE) No. 16. These standards, developed by the American Institute of Certified Public Accountants (AICPA), help to guide organizations in developing controls around their information systems, financial operations and other business systems.

Among the controls are those that protect system access to authorized users only. Another is change controls to ensure that system changes are tested prior to implementation so that they do not cause a disruption in service. Others address overall information technology policies, such as training protocols and internal and external communications regarding system usage. In an effort to maintain compliance on behalf of its clients, Safeguard follows and applies SSAE 16 standards in its operations as well.

Sharing knowledge and best practices

In a managing-up partnership, field service companies also should be resources to their mortgage servicing clients to share knowledge and identify opportunities to improve their own audit processes and compliance outcomes.

As the industry prepares for the implementation of the Consumer Financial Protection Bureau (CFPB) servicing guidelines in 2013, an area of focus will be borrower communication and outreach.

For many years, Safeguard has provided outreach to homeowners on behalf of its mortgage servicing clients. This outreach has included efforts to encourage troubled borrowers to contact their mortgage servicers for help and guidance, and identifying defaulted homes occupied by the families of active-duty service members and informing service members of their rights under the Servicemembers Civil Relief Act (SCRA).

After major disasters, such as Hurricane Sandy, Safeguard not only provides damage assessments to its servicing clients, but also helps disseminate contact information for the servicer, insurance information and other relevant communications.

Safeguard’s documentation library also has been a useful tool to help mortgage servicing clients align audit processes to reduce redundancies and inconsistencies. As an example, three separate departments at one client had requested information about Safeguard’s disaster recovery procedures within a short span of time. By cross-referencing the data requested by each department, we helped to identify a duplicate process and create an opportunity for the client to share information and auditing efficiencies across departments.

Proof is in the results

As a field service company representing the mortgage servicing industry to protect and preserve properties, Safeguard views its internal scorecards and its clients’ scorecards as one and the same. By continuously tracking and measuring our performance based on information gleaned from data on tens of millions of properties in our system, and continuously improving our processes we improve both our internal quality measures and the scorecards we receive from clients.

Working in partnership with clients to determine the right processes to measure and the right targets to meet is critical. This is especially true in situations where the client teams tasked with managing vendor relationships do not have the depth of experience to understand certain nuances and details that may impact outcomes, such as different sets of industry guidelines, requirements and issues that apply to maintaining pre-foreclosure and post-foreclosure properties.

Each service line maintains and monitors internal scorecards on the services it performs and is responsible for proactively implementing corrective actions to address deficiencies and maintain quality and client satisfaction. In the past year alone, Safeguard has made significant performance improvements that have directly benefited its clients.

Safeguard’s real estate-owned (REO) service line tracked an improvement of 39 percent in properties that had no deficiencies or quality issues, and a 79 percent improvement in the timeliness and quality of grass cuts. Overall, our quality scores for property preservation services on pre-foreclosure properties improved 11 percent in 2012, and quality scores for post-sale properties improved 7 percent.

By managing up, anticipating our clients’ needs and working to satisfy them, Safeguard has not only helped its clients comply with government regulations and internal requirements, but our clients also have helped us become a better company delivering higher-quality services and value to them.

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