Robert Klein, CEO of Safeguard Properties, was quoted in a Chicago Tribune article about the difficulties in enforcing local ordinances with foreclosed properties.

New laws sprout as homes sit

But existing rules on vacancies often unenforced

By Mary Ellen Podmolik | Chicago Tribune reporter
August 24, 2008

Cece Edwards and her Chatham neighbors pride themselves on caring for their homes, but their block just doesn’t look like it once did.

Three residences are abandoned. Neighbors take turns picking up garbage and mowing the front yards, but they feel uneasy about the unsecured doors and fence-high weeds behind the buildings.

“You come out every day and you see this monstrosity thing going on, and you’re compelled to do something,” Edwards said. “The rest of the block is beautiful. It’s so sad. You’ve got really huge mortgage companies that own title to these properties and aren’t cleaning them up.”

Now communities large and small around the country, including Chicago, are passing laws designed to get tough with property owners. The ordinances look good on paper, but can they be enforced?

Consider this: Chicago already had an ordinance requiring owners of vacant property to register them with the city for $100 a year. The city’s building department estimates there are 10,000 vacant residential buildings in Chicago and only 1,500 are registered. City officials say that’s because the ordinance wasn’t heartily enforced.

In early November Chicago will have an even stricter law on its books. It calls for vacant property owners to register and pay $250 every six months. Higher fees will be assessed for code violations.

Enforcement also calls for what could be dramatic and visible changes in how vacant houses are secured.

For example, doors and windows can be boarded up with plywood only for the first six months of vacancy. After that owners must replace plywood with expensive steel panels or install windows and doors and a burglar alarm?a difficult endeavor where the power has been shut off. A large sign also must be posted identifying the owner and the person or company responsible for the property’s condition.

“Many of these buildings have been sitting vacant and unattended for five, six, 10 years,” said Richard Monocchio, acting commissioner of the city’s department of buildings. “It was time for the city to push these investors, these absentee landlords and in many cases, banks, to not just sit and wait for the market but to do something positive with these buildings so they wouldn’t have a [debilitating] effect on the neighbors.”

Monocchio hopes that the registration fees and fines will spur banks and other mortgage lenders to try to avoid foreclosures. “We hope one of the offshoots of this ordinance is a greater incentive on the part of the banking community to work with people that are in the house.”

Two months before it takes effect, the law already has naysayers.

“When you put a sign in front of your house, that’s the one they target to break in,” said Daryl Russell, a broker associate at Williamson Realty in South Holland. “That’s an open invitation that this is the one that is vacant.”

Russell said he tries to inspect his South Side foreclosure listings weekly for squatters. Break-ins by vandals and thieves also are common. At times, he said he’s had to wait for as long as 45 days to get reimbursed by property owners for thousands of dollars spent resecuring buildings.

“[The city] is missing the bigger problem,” Russell said. “How do we keep the people from going into properties? How do we keep people from losing the properties?”

Others question the wisdom of requiring steel doors.

“They’ll start stealing those doors. Right now they’re stealing all metal from those properties,” said Remi Gorys, president of A City Suburban Service Inc., which has been securing buildings for 15 years.

Flood of foreclosures

Chicago also will no longer grant work permits involving vacant buildings unless they are registered. And to gear up for the new law, residents will be reminded at aldermanic and block club meetings to call 311 to anonymously report vacant, unattended buildings.

South suburban Oak Forest passed a law in late July requiring owners to pay $200 to register vacant buildings. Neighbors had been cutting lawns at vacant homes, but with 78 foreclosed homes, Oak Forest has hired a firm to mow grass. The city is draining swimming pools that could pose safety hazards.

More such laws are expected around the Chicago area as the housing crisis deepens. Foreclosures in Chicago in July rose by 84 percent over their level in the same month two years ago. In the 60611 ZIP code on the city’s Near North side, for instance, the number of foreclosures filed has quadrupled, to 25 in July from 6 in the same month two years ago. During the same time frame, foreclosures in the 60659 ZIP code, which covers North Park and West Ridge, climbed 489 percent, to 53 from 9, according to data from RealtyTrac.

As reported Thursday, the Woodstock Institute, a Chicago-based non-profit that promotes community reinvestment, said in a report that the number of foreclosed properties going to auction in the five-county Chicago area climbed 98 percent between 2006 and 2007, to 13,727, and that it believes the trend is continuing this year. The finding is significant because it means many properties are ending up back with lenders rather than sold to buyers or investors who theoretically would be motivated to repair and maintain them.

Who’s the owner?

While on calls, Chicago’s 190 building inspectors will be expected to report addresses of vacant buildings they find so that the city can run title searches.

But determining ownership is not easy. Registration ordinances recently have recently been passed in communities like Temecula, Calif.; Methuen, Mass.; and Lee’s Summit, Mo., to name a few.

Lee’s Summit estimates the number of vacant homes in the community of 93,000 people has swelled to 300, but with the registry it hopes to determine a real number. “The biggest problem is you don’t know who to call,” said Mark Dunning, the city’s director of code administration. “You can make about 10 phone calls and not get anywhere.”

Real estate agents who work with banks to try to sell foreclosed properties worry that they will become targets of government regulations. For instance, Atlanta city inspectors, weary of the condition of foreclosed homes, have begun ticketing listing agents for code violations.

Registration enforcement has been slow around the country. In the first two months after registration rules went into effect this spring in Lake Elsinore, Calif., fewer than 60 of the estimated 1,000 foreclosed properties had been registered.

Mortgage bankers and firms hired to maintain vacant homes also are frustrated by the disparity in rules. For the past three months, Safeguard Properties, a large field services firm that works extensively in Chicago, has conducted weekly teleconferences with 70 to 80 mortgage servicing companies to update them on new laws.

“Every single day we get reports from different localities,” said Robert Klein, chief executive of Brooklyn Heights, Ohio-based Safeguard. “I’ve got ordinances from localities that I can’t even pronounce their names. There’s no way in the world that this industry can physically deal with 5,000 different ordinances, and each of them has their different caveats in them.”

Robert Klein was quoted in a Wall Street Journal article regarding vacant property fees imposed by local governments.

Safeguard’s “Good Neighbor” program was mentioned on MortgageOrb.com.

Safeguard Properties, a Cleveland-based field services company, has introduced an initiative designed to reduce the risk of criminal activity at properties left vacant due to foreclosure. The company proposes that a door hanger be left at properties adjacent to a vacant and secured property. The door hanger will provide an 800 number that will enable neighbors to contact Safeguard 24/7 if they see any questionable activity or maintenance issue that needs to be addressed.

Servicers and local governments are partners in fighting blight, maintaining safe neighborhoods and ensuring properties are maintained, says Safeguard, but the correlation between vacant properties and criminal activity is well documented in communities nationwide.

As foreclosures and vacancies mount, the company has seen a material increase in the number of copper-pipe thefts, arsons and related crimes at these vacant properties. This ripple effect drastically reduces the servicer?s collateral in its assets and wreaks havoc on the communities where the properties exist.

This door-hanger approach has received enthusiastic endorsement from code enforcement and city officials, Safeguard adds. The first draft of the proposed Good Neighbor door hanger is available at https://safeguardproperties.com/pub/pdf/P&P_door_hanger.pdf

Robert Klein has been nominated for 2008?Entrepreneur of the Year by SmartBusiness magazine. The online article featuring Robert’s profile can be viewed here.

Service excellence

How strong customer service standards have allowed Robert Klein to grow Safeguard Properties

Smart Business Akron/Canton | July 2008

Robert Klein founded Safeguard Properties in 1990, and his motto has always been that customer service equals resolution.

In his early years, one of his properties suffered $18,000 in plumbing damages because of a mistake made by one of the company?s contractors.

?We have a problem,? the client?s CEO said in a phone call to Klein. ?We don?t have a problem,? Klein replied. ?I have a problem. You hired me to do the job right, and it wasn?t.?

Despite the fact the mistake was made by another party and that an $18,000 repair was a huge burden for a young company, Klein fixed the problem. Because of his willingness to accept full responsibility, that same client gave Safeguard its first $1 million contract within a month of that call.

As his business continued to grow, Klein?s strategy was always to listen to what clients wanted and needed, and to forge close relationships with clients at the ground level as well as at the executive level. Doing so has allowed him to address property issues in the field while focusing on cost efficiency and performance guarantees at the executive level. This has garnered him a reputation of being an innovative CEO, and he continues to look for creative solutions and relevant information for all of his clients.

As the mortgage industry has changed dramatically, so has Safeguard. Because of new trends, the company has evolved from a regional business model to a national one. With that change comes risks, but Klein remains focused on responsibility to clients and has invested heavily in technology to give clients 24-7 access to property information.

Eighteen years after the company?s founding, Klein, despite not having any background in the industry when he started the business, has grown Safeguard to become the largest private mortgage field services company in the nation, responsible for nearly 700,000 work orders each month on defaulted and foreclosed properties.

Safeguard Properties was mentioned in an article from DSnews.com which can be viewed here.

Cuyahoga County Proposes Land Bank Program To Tackle Rising Number of Abandoned Properties?

Carrie Bay | 07.16.08

Treasurer Jim Rokakis of Cuyahoga County, Ohio has developed a long-term redevelopment strategy to address the county’s growing number of abandoned properties. If approved by the state legislature, this initiative will enable the institution of Community Improvement Corporations with decentralized county governance, and it will allow counties to design individual plans that are tailored to meet the needs of their communities.

Land reclamation of vacant and abandoned properties has long posed a problem in urban areas, and the burgeoning foreclosure crisis has only amplified the problem. According to Cleveland-based Safeguard Properties, the city of Cleveland, within Cuyahoga County, will likely spend about $9,000,000 demolishing condemned properties and another $4,000,000 on the upkeep of vacant lots this year alone. Both costs are regressive expenses, meaning that demolished properties will then become additional vacant lots, all of which will require upkeep and maintenance year after year.

Under Rokakis’ plan for Cuyahoga County, a county-sponsored ?land bank? will actively address the abandoned properties problem by opening up much needed resources. Modeled on the success of the Genesee County, Michigan Land Bank, the proposed Cuyahoga land bank will have the power to acquire abandoned properties from banks, receive tax-foreclosed properties, maintain properties pending rehabilitation, prepare land for development, and demolish those properties with no residual equity. The land bank will have the authority to buy, sell and hold properties throughout Cuyahoga County.

Rokakis asserts that the land bank must be self-sufficient since other government funding cannot be assured. According to Safeguard, he has outlined three essential sources of funding for the Cuyahoga County land bank:

-Tax anticipation: The treasurer proposes to pay outstanding real estate taxes by borrowing the money from its daily balance, and allowing the land bank instead of the individual taxing districts to recapture the statutory 10 percent penalty and interest on delinquincies.

-Tax collection cost fund: A change in the Ohio Revised Code regarding treasurers’ fees on delinquent taxes would allow an additional 5 percent to be collected and slated for counties’ land banks.

-Bundling: Pending changes to the Ohio Revised Code, tax foreclosed properties will be auctioned in ?bundles?, to prevent speculators from picking up only higher equity properties and leaving behind the negative equity properties to escheat to the state. These bundles will then be used to help fund land bank operations.

Safeguard says Rokakis’ proposal is expected to make a noticeable dent in the number of structures needing demolition in Cuyahoga, minimize the immediate negative impact they have on the community, and hinder proliferating speculation and flipping of these properties.

The Tampa Tribune recently printed an article in which Robert Klein was quoted. The article can be viewed online here.

The Rubble Of Foreclosures Is Business For Some

By JEROME R. STOCKFISCH
The Tampa Tribune
Published: June 30, 2008

ST. PETERSBURG – Chad Berry has plenty to be distressed about as he and his crew clear out the remains of one family’s life in the once-stately Bay Vista home.

There is the matter of how to remove several heavy, armoire-size steel safes the evicted family left behind. There are the nine vintage arcade games, including Ms. Pac-Man and Asteroids, posing a cumbersome and heavy load.

But it isn’t the back-breaking volume of abandoned furniture that is troubling Berry on a recent weekday morning. It isn’t the stench from the food that had been removed from the refrigerator and left to rot in the kitchen sink, accompanied by buzzing flies and a mouse carcass. It isn’t the dog feces dotting the floors.

It is up the grand staircase in a small bedroom where Berry, a father of two young girls, appears out of sorts.

“That’s the only thing that ever bothers me,” says the owner of Gulf Coast Grounds Maintenance. “You see a little girl’s stuff. You know how much care and joy went into that bookshelf, into making that little manger scene. You know how they rearrange it. It gets to you, man. It bugs you.

“See that bookcase?” he says, gesturing to shelves lined with the toys, books and knickknacks that a young girl was forced to abandon. “It’s just, … I don’t like that.”

Painful Process

Berry holds one of several critical roles in the process of taking possession of and reselling homes lost because the owner couldn’t meet the monthly mortgage payment.

Florida is second in the nation in foreclosure filings. It can be a grim job to turn those suddenly vacant houses around and restore the housing market to some sense of equilibrium. But there can be no denying that the misery of foreclosure has also provided opportunity.

From lenders to field service companies to real estate agents to sheriff’s deputies who make it happen, there is acknowledgment that the foreclosure process is unfortunate yet necessary. There is unanimous consent: Nobody wants to foreclose on a home and evict the homeowner.

“It’s the last thing you want to do,” says Ron Tremblay, a senior vice president for Wachovia responsible for the bank’s repossessed real estate portfolio. “It’s the last piece of a very painful process. It’s painful for the property owner, painful for the bank, painful for the neighbors, for the community, for all of that. My role, as I view it, is to put the money back into circulation as quickly and efficiently as I can for the bank, and do it in a conscientious manner.”

Tremblay runs a Wachovia division fairly rare in the banking industry, an in-house program to rehabilitate and re-list homes to sell them to an owner-occupier. Most lenders outsource the chore.

When a bank takes possession of a home, it becomes “real estate owned,” or REO. In the past, those homes were typically marketed to handymen or investors who could pick them up inexpensively and turn sweat equity into rental income or maybe even a lucrative sale. The goal for lenders was to quickly get the real estate off their books.

But the process is changing as the housing crisis and the foreclosure spike spread beyond the low-income arena.

Subprime loans, mortgages with tricky terms, no-money-down packages, and more traditional factors such as rising unemployment have victimized people across the economic spectrum.

Returning homes to mint condition and targeting an audience of family owners and occupiers is a trend that has developed in recent years, says Robert Klein, chief executive of Safeguard Properties, the nation’s largest mortgage field services company.

“You used to put signs out that would say ‘REO Foreclosure,’ hinting, ‘Hey, come on in and get a bargain on me,'” Klein says. “We’re now well aware that the answer is not simply to sell to a flipper. You sell to a flipper right now, and in three years it’s right back where it was.”

The Bad With The Good

This month in Apollo Beach, Wachovia staffers Drew Niswonger and Scott Daal begin a tour of their bank’s REO properties in the Tampa Bay area with a stop at a $600,000 home in the Andalucia subdivision.

Niswonger and Daal are supervising Wachovia’s strategy of improving the foreclosed homes to what Tremblay called above-average condition – “so that when you walk into it, it doesn’t look or feel like an REO.”

It’s a hands-on approach. Daal, vice president and regional team leader for Wachovia’s REO division, traveled to the Bay area from Morristown, N.J. Niswonger, sales manager for the region, crossed the state from Daytona Beach.

“You can’t do this from behind a desk,” Daal says.

A lender looking to bring a house back to ship-shape might spend $5,000; if major appliances are involved, the tab can rise to $10,000.

The pair conclude that the Andalucia home is coming along nicely. It is being painted in colors specified by Wachovia. New stainless steel appliances have been installed, with new carpeting on the way. Utilities are on, and the air conditioning is running.

“This one’ll go quick,” Niswonger says.

Their next stop is a $295,000 home in the Rosedale subdivision in Bradenton. Contractors scurry about the home, where one of the residents has left behind an affirmation scrawled in green crayon on the white living-room wall: “Giggles ‘n’ Squirmy,” it reads, surrounded by an orange heart.

The Wachovia staff take note of a missing exterior light fixture. Daal halts a painter who isn’t using the specified color for an interior wall.

“This one will clean up well,” Daal says. “We want to show it like it was a new house.”

That would not be the case in the Bond neighborhood of St. Petersburg, where the two pay a visit to a home to which Wachovia recently took title.

“What’s the adage?” Daal wonders aloud. “One man’s junk is another man’s treasure?”

The house, which may have been a three-unit rental – or may have been converted illegally from single-family home to rental units – is littered with debris and the evicted tenants’ former belongings.

With the utilities long since cut off, the thick odors of cigarette smoke and an unflushed toilet hang in stagnant air. A television and various stereo components have been left behind, along with furniture, dirty dishes and food. Mattresses are scattered throughout the units, and there is evidence of rodents.

“This is a tough one,” Daal acknowledges after touring the property. “I think we have a lot more to learn before we make a decision on where we’re going to go with it, who our buyer is, what its value is. The more I look at it, the tougher it looks.”

Indeed, the Wachovia staffers later determine it would take too much work to bring the St. Petersburg dwelling up to the bank’s standards to resell it to an owner-occupying family. It will be cleaned up and sold as-is to an investor.

But there is better news at the higher-end properties. Within three weeks, the Bradenton house is sold, and an offer on the Apollo Beach house is being entertained.

Where Business Is Booming

The region’s real estate market has been among the hardest-hit in the nation. The Tampa-St. Petersburg-Clearwater area had 4,773 foreclosure filings in May alone, or one in every 271 households. That was up 15 percent from April and 29 percent from the same month last year.

Nationally, the foreclosure rate is one in 483 households.

Along with the construction of homes, the foreclosure spike is contributing to a housing glut that has depressed prices. The median sales price in the area was $176,100 in May, down 16 percent from $209,300 a year earlier.

The Greater Tampa Association of Realtors says there is a 15-month inventory of homes on the market in this area, compared with one to two months in 2004-05.

One key to a housing turnaround would involve removing a big chunk of the 19,800 listings on the local market.

Economists report that new housing starts are down, which can bring alarming headlines but is good news for the bloated Bay area market. A reduction in the number of foreclosed homes on the market would also provide a shot in the arm.

That’s where companies such as Safeguard come in. The company, based near Cleveland, expects to serve 660,000 maintenance contracts nationwide this year, up from 173,000 five years ago.

The local market for Berry’s services is also red-hot. “Business is incredible,” said the head of the St. Petersburg maintenance firm. “I’ve been in it since 1989, and I’ve never seen a market like this.”

Like Safeguard and the other big national mortgage service companies, Berry performs most of the duties a lender requires to get a house in shape to be resold. He will make house visits or perform drive-by surveillance of homes in default, to report to the lender whether they are still occupied. He will enter an abandoned house and change locks. He does the “trash-outs” such as the project at the south St. Petersburg house. He has contracts for maintenance of 120 lawns of homes that have been foreclosed or are in pre-foreclosure. He has been on site with deputies during those ugly moments when families are forced to depart.

“There are some, when I walk in, the kids have done this before. You can just tell,” he says. “They know what’s going on, they know who you are, what you’re there for, they just gather up what’s important to them and take it. They’ll throw down a bedsheet, put the stuff in there, and you’re like, ‘That’s a kid. How does this kid know?’

“The kid has no emotion at all. They’re just kind of like, ‘Oh, that’s how people live.’ I’m like, ‘Oh, my gosh.’ That’s so nasty.”

But Berry is also aware of the magnitude of his role.

“If I wasn’t here … and nobody did this, the banks would become illiquid,” he said. “They wouldn’t be able to sell the property. They’d be gone.”

Treasures To Trash

As he is sifting through others’ misfortune, Berry says he often wonders about the circumstances. “There’s just no telling where they are, what happened to them,” he says at the south St. Petersburg home.

Sometimes, there are clues. On this day, he finds family portraits and snapshots that aren’t defaced or torn up, “so they’re not totally pissed at each other,” he concludes. He has seen otherwise.

The material scattered around the house doesn’t seem as if it should be destined for the trash pile.

A box of basketball and baseball trophies. Comic books, SpongeBob SquarePants toys and books. A large white envelope addressed to “Dad.” Ear buds, a Harry Potter collection, a math textbook.

A late-model pickup, destined to be impounded. An exercise bench. A wetsuit. Outside, in a pile of debris, a sonogram photo of an unborn baby.

Days later, the scene is repeated at a Town ‘N Country home recently vacated due to foreclosure. Mark Pace of Tampa Suncoast Realty has been contracted by the lender to turn it around.

As an REO specialist, the bulk of Pace’s work traditionally took place in low-income neighborhoods. But no more, he says. “High-end. Low-end. It’s a little bit of everything,” Pace says. “No neighborhoods are exempt from this.”

Hillsborough County sheriff’s Deputy G. Hammond knocks and gently pushes open the front door. “Sheriff’s office!” he shouts.

It is clear the home has been abandoned. The deputy returns to the front walkway after a brief tour to ensure no one is on the premises.

“Who wants to sign?” he asks.

Pace puts his signature on a sheet headed “Notice: Writ of Possession Executed,” and Hammond tapes it to the door next to an older posting, “Final Notice of Eviction/Execution.”

Pace and an assistant start hauling abandoned property to the curb.

And in an area with 15 months’ worth of homes on the market, another one is up for sale.

Reporter Jerome R. Stockfisch can be reached at (813) 259-8402 or jstockfisch@tampatrib.com.

?

DSnews.com?has printed an article about Safeguard Properties donating $150,000 to Cuyahoga County’s Foreclosure Prevention Program.

Safeguard Properties Honored for $150K Foreclosure Prevention Donation
by Nicole Barbosa | 06.13.08

Troubled borrowers have started to turn toward the unlikely. Not a traditional homeownership counselor or lender/servicing representative?but a vendor.

Though Ohio ranked only ninth nationwide with a foreclosure rate of one in every 410 homes, the Buckeye State posted 12,295 total foreclosure filings?placing fifth, according to the latest data released today by RealtyTrac. But these stats don’t keep companies, like Cleveland-based Safeguard Properties, from going out to their way to offer up advice and foreclosure prevention to homeowners in need of hope and answers.

Robert Klein, CEO and founder of the company, is receiving recognition and praise from colleagues for his dedication to this endeavor.

Klein and his company were recognized Friday morning by County Treasurer Jim Rokakis for the $150,000 dollar grant ($50,000 over three years) they provided to the Cuyahoga County Foreclosure Prevention Program.

?We are grateful for Safeguard’s commitment to the region and for their understanding of the critical role foreclosure prevention plays in protecting our neighborhoods and communities,? said Rokakis. ?This grant comes at an important time for all of us and will go along way towards helping to protect at-risk homeowners from foreclosure.?

The program, also known as the ‘Don’t Borrow Trouble’ campaign, attempts to provide the necessary tools (pamphlets, ads, etc.) to homeowners to prevent victimization by predacious lenders. Since it began in 2006, the program has assisted more than 10,000 homeowners and had a direct hand in the prevention of more than 2,100 foreclosures.

‘Cuyahoga County is our home, where we live and raise families. As a business, we see first-hand the devastation that results from foreclosures. It’s in all our interests to work together to prevent [them], and Safeguard is honored to participate in this initiative,’ Klein said.

For more information about the Cuyahoga County Foreclosure Prevention Program and the services they provide, click here.