Managing REO published?an article regarding the Mortgage Electronic Registration System (MERS) Initiative from the MBA and the impact it is having on code enforcement in the cities that utilize it.

MBA MERS Initiative Makes A Difference

By Jennifer Harmon

The MBA Vacant Property Registration MERS initiative is currently being used by 238 cities, which is already helping the mortgage industry see a substantial decrease in code violations on vacant properties.

At no cost to the city, code enforcement officials can go into the MERS database and immediately see who the titleholder is, who the servicer is, the property preservation company, and most importantly, the point of contact.

?The biggest issue from code enforcement officials around the country is they don?t know who the point of contact is when they have an issue. It seems as if it has been resolved,? said Robert Klein, founder and CEO of Safeguard Properties, which through the Mortgage Bankers Association and its lender/servicer members created the initiative to address the increasing number of vacant property ordinances being enacted across the country.

?It?s being used by most of the major cities which I think is a phenomenal success. It definitely has alleviated quite a bit of the issues the industry has had from both sides not being able to communicate with each other. We?re seeing an 80% hit rate. For those with a 40%-50% hit rate, those cities are ecstatic. That?s 40% less than they have to go in and dig around when they have an issue.? Prior to this, there was no way the industry as a whole was able to comply with different vacant properties ordinances.

The program is being taken to the next level as states are getting more and more involved with passing laws at the statewide level. ?Every single state has some type of vacant property law on the books, and this new program is going to be very helpful to start establishing dialogue and communication with different states around the country.?

Mr. Klein, chairman of the MBA VPR Committee, worked closely with the MBA?s Chris Oswald, director/state legislative affairs, and Vicki Vidal, association vice president, loan administration, at government affairs, to make this unique program a reality.

?Ninety-five percent of the national servicers are part of that committee. The entire concept was thought up and implemented by the MBA, which if I’m no mistaken released a letter to all its members strongly requesting its servicers all register or put their properties on the MERS database. It?s widely industry endorsed.?

The collaboration was a very natural occurrence, he adds. ?In my opinion, some of the city’s had legitimate complaints of the vacant blight issue. Vacant properties are impacting communities around the country. The MBA was an ideal vehicle to pull together the industry as a whole to come up with this idea and the solution to in my opinion to help stem the tide of vacant blight on a national level.”

?MERS has always had informational on a particular mortgage but the problem was all they had was the title holder?s name. Just by having that did not help the city. In order to reach someone at the mortgage company to address the code violation it took two to three weeks or a month of frustration. Now, they get the point of contact within the organization. It?s a simple solution.?

Dan McLaughlin, executive vice president and product division manager for MERS, speaks highly of his experience working with the folks at the MBA and Mr. Klein.

?It was very expensive and very difficult for national servicers to register these properties. They would have to go into potentially thousands of Web portals and enter all of this information on all these different registries around the U.S. and pay a fee to the jurisdiction for that,? noted Mr. McLaughlin.

?This became such a problem that the MBA was trying to help solve it. It occurred that MERS is a potential solution here. Robert Klein of Safeguard saw the vision there, too, and saw the opportunity. What we did was we said we are going to add fields to the MERS system that identifies the person, the individual, their telephone number of the company they work for, who is responsible for maintaining a vacant property associated with that loan on MERS, etc.?

The loans are already registered on MERS and it is costing cities nothing, he stresses. ?The 20% where they do not have MERS, it?s costing them 97 cents or less. The alternative would be to pay all these jurisdictions, like in Virginia, $350 or $600 or as much as they want to charge. It?s been as much as that by the way for the privilege of registering the property on the local registry,? said Mr. McLaughlin.

It?s all highly automated. Without using this technology, lenders would have a staff of people doing nothing all day except for registering tens of thousands of properties in all the different jurisdictions. ?I?d like to take credit for it, but I can?t. Vicki Vidal, Robert Klein. They saw the vision and the opportunity. This is a just a phenomenal collaboration.?

DSNews.com published an article about Safeguard Properties’ efforts to prevent the blighted look of boarded-up windows through the use of “artistic boarding.

Safeguard Properties Seeks to Mitigate Urban Blight with ?Artistic Boarding’

Real estate agents have long known how important staging and curb appeal can be to getting the right price or even to selling a house. Now Cleveland-based Safeguard Properties is rolling out a product to help prevent the blighted look of boarded-up windows.

“Artistic boarding” is a simple product that can be affixed to plywood boards to make them look like window frames. The company has received positive feedback from a pilot program to test the product.

“Safeguard appreciates the positive response that local governments have offered in connection with the Artistic Boarding pilot program,” said Robert Klein, Safeguard’s chief executive. “We anticipate that these cost-effective boarding options can greatly enhance the communities’ perception of the industry’s commitment to neutralizing vacant blight around the country.”

The negative effects boarded properties have on communities throughout the country can be devastating and far-reaching, the company said.

The new product addresses the problem of trying to minimize the number of vacant and abandoned-looking properties, while protecting the integrity of a particular property.

Feedback from the pilot program suggests that artistic boarding enhances the curb appeal of vacant properties, and can change the face of neighborhoods. It can help revitalize communities blighted with vacancy and preserve valuable housing stock, the company said.

Safeguard Properties is the largest privately held field services company in the country, with more than 700 employees and a nationwide network of subcontractors to provide superintendence, preservation, and maintenance functions.

The Cleveland Plain Dealer published an edited transcript of an interview with Robert?Klein, CEO of Safeguard Properties, for the first in a series of weekly conversations with Northeast Ohio executives about about the workplace, careers and management.

Safeguard Properties CEO Robert Klein leads by example at mortgage field services firm

by Michelle Jarboe/Plain Dealer Reporter

Robert Klein started Safeguard Properties in 1990 and has shepherded its growth into the largest privately held mortgage field services company in the United States.

The company, which secures and maintains homes that are in the foreclosure process or owned by banks, has more than 700 employees and a nationwide network of thousands of contractors who do everything from mow lawns to replace windows and clean out vacant houses.

Safeguard has annual revenues of more than $500 million. The flood of foreclosures during the recession has created more work, so the company has continued hiring.

Klein recently sat down with Plain Dealer real estate reporter Michelle Jarboe for the first in a series of weekly conversations with Northeast Ohio executives about about the workplace, careers and management. We call it “Talk With the Boss.” This is an edited transcript.

The Question: What leadership lessons did you learn when you first started managing people?

The Answer: I think one of the leadership lessons I learned a long time ago is lead by example. Don’t lead by giving orders. People will follow you if they see you have an interest in what they’re doing and you’re there with them, working as hard as they are to make this thing a success. Leadership, in my opinion, is based on do what I do — and not, “Forward, march.”

The Question: As the company grows, what do you need to do more of as a manager?

The Answer: You’ve got to hire smart people. It gets more and more complicated to keep your hands on everything that is occurring, so you’ve got to make sure that the people that are out there, actually doing the work, are of the highest caliber. And, hopefully, most of them are smarter than I am.

The Question: What do you look for in the hiring process?

The Answer: We can’t hire college graduates that know what our product is. We have a very extensive training program that people need to go through in order to be able to provide the services. So making sure that you have an HR department that does the right interview and knows the right qualifications and gets the right people in the right positions is absolutely critical.

The Question: Are there any traits that you have low tolerance for in employees?

The Answer: It’s called non-follow-up. If we tell a client we’re going to do something, we’d better do it. There is no excuse for not following through. Our entire company’s philosophy has been built on “customer service equals resolution,” and I am very serious about it. As long as we keep resolving our clients’ issues, we will continue to be successful.

The Question: How do you give feedback to employees?

The Answer: I’m an e-mail freak, so I utilize e-mail quite extensively with the entire staff. Acknowledging success, regardless of what level the employee is in the company, is very important.

If someone does a good job, it is very important to acknowledge their success and encourage them and make them feel like they’re part of the company.

The Question: How do you manage your time?

The Answer: I don’t sleep much. I think that the most critical piece in doing what I do is to make sure that you continue to enjoy what you’re doing. It’s still a challenge to me. It’s just as much of a challenge now, with 700 employees on staff, as when I had two employees. As long as the challenge is there, I’m fine.

The Question: Can you reflect on some of the best bosses you had prior to founding Safeguard?

The Answer: I never had a boss. I never worked for anybody in my life. I had a company downtown here in Cleveland, it was a produce company. I did that for about 13 years. Prior to that, I was in New York and I was driving a cab in New York for about five years. My father, who in my opinion was one of the smartest people in the world that I knew, told me at a very young age, he said, “My son, God blessed you with a brain and cursed you with a mouth, so you won’t be able to keep a job down.” So I’ve really never worked for anybody.

The Question: Was that a challenge in trying to figure out how to be a boss?

The Answer: Well, I never looked at myself as a boss. I always looked at myself as somebody who needs to make a living. I’ve always looked at myself as part of a company and trying to make it grow. We’ve been in business for 19 years, and up until about eight or nine years ago I never had an office. I had a cubicle. I was on the floor with everybody else and making this thing work. There’s a reason why my office has all windows so the staff can see, because I want my staff to see that I’m sitting in my office and I’m doing the work. I’m not sitting here smoking cigars, smoking cigarettes. I’m here working with them, and you’ve got to put a day’s work in.

Safeguard Properties’ CEO Robert Klein?was mentioned in an article in MortgageOrb about the 2009 Coalition for Mortgage Industry Solutions (CMIS) Awards.

CMIS Awards Industry Members??

Earlier this month, the Coalition for Mortgage Industry Solutions (CMIS) awarded several industry professionals with 2009 CMIS Awards at the AFN’s 7th Annual Leadership Conference in Santa Ana Pueblo, N.M.

American Legal and Financial Network (AFN) President and CEO William M. LeRoy was presented with the Lifetime Achievement & Visionary Award, and Safeguard Properties CEO Robert Klein was awarded the Leadership & Visionary Award for REO & Property Preservation.

The CMIS also recognized two attorneys – Hughes Watters Askanase’s Carolyn A. Taylor and Rosicki, Rosicki & Associates’ Cynthia A. Nierer – with awards for excellence in foreclosure and bankruptcy law.

SOURCE: CMIS

DSnews.com picked up the press release regarding the Safeguard Properties 2009 Vendor Conference.The conference drew record attendance of 1,200 contractors, inspectors, city officials, clients, and investors from across the country.

To view the full press release, click here.

Robert Klein, CEO of Safeguard Properties and chair of the Mortgage Bankers Association’s vacant property registration committee, was quoted in an article about the aggressive code enforcement of vacant properties in Chula Vista, California.

City under gun to ease blight fight

Lenders squeezed by Chula Vista’s fines, penalties

Chula Vista’s tough anti-blight ordinance has become a national model for requiring lenders to maintain vacant foreclosed homes before they fall into disrepair, but the city is under mounting pressure to reduce the measure’s stiff fines and give lenders more time to improve properties.

The city broke new ground in the fall of 2007 by enacting regulations that allowed it to issue citations for blighted dwellings after lenders filed notices of default, which mark the start of the foreclosure process.

So far, Chula Vista has levied fines totaling more than $1.3 million and collected about $752,000. Registration fees for vacant homes under the program have reached about $183,000.

Some critics say an unintended consequence of the ordinance may be to delay the recovery of the local real estate market. Faced with large fines, some banks may become reluctant to do business in the city, they say.

Initially, some lenders expressed shock at fines that on occasion can exceed $10,000. Officials say the large penalties were necessary to force a change in lender behavior.

Traditionally, cities have waited until lenders have taken formal possession of abandoned foreclosed homes before issuing citations. That can take months in some cases, forcing municipalities to address blight issues on their own. Typically, they remove weeds and drain swimming pools, seeking reimbursement later. Chula Vista has used its measure to place the burden on lenders.

The program requires banks and loan servicers to inspect foreclosed properties to confirm they are occupied. If they are abandoned, the lenders must register the properties with the city and secure and maintain them.

Under the ordinance developed by Doug Leeper, the city’s code enforcement manager, lenders are responsible for upkeep, even if ownership hasn’t formally been transferred to them through foreclosure.

With fines that can reach $1,000 per day, the measure has pushed Chula Vista to the forefront of a national drive to maintain neighborhoods hit hard by the mortgage market meltdown, said Peter Lemos, code enforcement field manager for Stockton.

Stockton is one of more than 200 communities nationally that have adopted anti-blight measures based on Chula Vista’s regulations, Lemos said.

“It brought to light that the lender or the bank is responsible for the vacant properties,” he said. “Before, until you had a new homeowner, no one was responsible.”

Real estate agents typically work closely with lenders, supervising repairs to vacant foreclosed homes and preparing them for resale. Initially, there was little opposition to Chula Vista’s abandoned-property ordinance from agents, said Pat Russiano, president of the Pacific Southwest Association of Realtors, a trade association for South County.

The group has come to believe that banks eventually may avoid doing business in Chula Vista because of the ordinance, Russiano said. With credit tight and many lending institutions struggling to maintain solvency, real estate agents say they don’t want lenders to have another reason not to approve home loans.

“They are already scared to death,” Russiano said. “Why give them one more thing to worry about?”

Large fines could affect lending decisions among banks that already are hurting from widespread home loan failures, said Dave McDonald, government affairs chairman for the San Diego County chapter of the California Association of Mortgage Brokers.

“The effect would not necessarily be redlining, but the manipulation of the foreclosure market,” he said. “If lenders think they will be fined $1,000 a day, there is a motivation to not do business in that area.”

Henish Pulickal is the former manager of San Diego-based Accredited Home Lenders’ department for properties acquired through foreclosure. Accredited, which was caught up in the subprime lending crisis, recently filed for bankruptcy protection. Pulickal said the anti-blight measure places unnecessary burdens on the lending industry.

“They were giving us violations for anything, whether it was a propped-open window, saying it was unsecured, to having dead grass,” Pulickal said.

Jay Norris, an account representative for First American Title, said he recalled a case in which an agreement to sell a foreclosed home fell apart because of a dispute between the city and the bank over a large fine. If banks perceive they are being hurt, they could think twice about how they do loans in Chula Vista, he said.

“There have been a lot of unintended consequences with this ordinance,” said Richard D’Ascoli, director of government affairs for the South County Realtor group. “It’s been a nightmare.”

Fines, in addition to scaring away banks, could end up becoming liens against defaulted properties, discouraging purchases or making lenders reluctant to approve mortgages for the buyers of foreclosed homes, Russiano said.

City officials say such outcomes are highly unlikely. Title insurance protects home buyers and lenders against errors in real estate transactions, such as an undiscovered liens.

Code enforcers stress that they aren’t placing undue pressure on lenders to comply with the abandoned-home measure. Emily Novak, a senior code enforcement officer, said her department gives lenders 30 days to secure abandoned homes and make any necessary repairs. Out of about 3,000 cases in which repairs were needed, fewer than 150 properties have been fined, she added.

Robert Klein, who chairs the Mortgage Bankers Association’s Vacant Property Registration Committee, said he supports measures like the one in Chula Vista. He said it is in everyone’s best interest to deal with abandoned properties early on, before they become blighted.

All lenders need to do to avoid fines is secure and maintain vacant homes until they are sold, said Klein, who heads Safeguard Properties, a property-management firm that represents lenders nationwide.

Alan Mallach, a senior fellow with the Brookings Institution, said the ability to levy high fines has enabled Chula Vista to protect its neighborhoods.

“That was really the important step on the part of Chula Vista,” Mallach said. “A lot of people saw that and followed their lead. It was, as far as I know, the first city in the U.S. that really took hold of this matter and said, ?Lenders, you have to take responsibility for these properties.’?”

Chula Vista Mayor Cheryl Cox said the fact that the ordinance has drawn praise as a national model shouldn’t stop the city from taking a look at how well it works or how it affects the real estate and lending industries. A proposal for modifications from the city staff is expected to reach the City Council by the end of this month.

Chula Vista is one of the communities in San Diego County that was hit hardest by the surge in foreclosures. Cox said that with some indications showing the economy is turning around, she hoped there would be less need for the abandoned-home measure. It may be possible to reach a compromise between supporters of the measure and its detractors, Cox said.

The city staff and the Realtors group already have made progress on some issues. There is a tentative agreement to streamline the process for registering abandoned homes within the city, Deputy City Attorney Chance Hawkins said. The city also is open to a proposal to allow vacant homes to be maintained by national property-management firms rather than only local companies.

The mayor said her goal is to have an anti-blight measure that protects neighborhoods without impeding the ability of lenders and real estate agents to do their jobs.

“Lots of cities have copied our ordinance,” Cox said. “That’s always flattering. That hasn’t stopped our staff from saying, ?Is there a way to shift this a little bit, make it a little more effective, a little more palatable?’?”