Safeguard Properties

Laws to Fast-Track Vacant Home Foreclosures Slowly Gain Traction

Posted on by Safeguard

Legislation Update
April 28, 2017

Years after the worst of the housing crisis, states still dealing with high foreclosure activity are weighing laws to speed the process on vacant or abandoned properties.

Maryland Gov. Larry Hogan is expected to sign a bill soon that would fast-track the foreclosure process for abandoned or vacant properties. Under the law, a property would have to meet at least three of 11 criteria aimed at ensuring it is no longer occupied in order for it to be eligible for fast-tracking.

Fast-track laws vary, but are most common in judicial foreclosure states. Illinois, Indiana, Nevada, New Jersey and Oklahoma, as well as Michigan, a nonjudicial state, have fast-track laws on their books, according to a 2014 report by the National Consumer Law Center. New York and Ohio passed their own laws in 2016 and a fast-track bill was recently under consideration in Pennsylvania. In New Jersey, a new bill under consideration would make it easier for planned real estate development boards — like a condo association — to obtain a court order requiring servicers to use the state’s existing fast-track process.

Nationwide, nearly 5% of all properties in the foreclosure process are vacant, according to Attom Data Solutions. But the rate of these so-called zombie foreclosures is much higher in states like Vermont (15.4%), Oregon (11.9%) and others.

Despite the fact that foreclosure activity has fallen below prerecession levels nationally, several states still have a foreclosure problem of one kind or another that is exacerbated by longer timelines.

The foreclosure rate in states like New Jersey and Maryland, for example, was more than twice that seen overall in the United States during the month of March, according to Attom Data Solutions.

For markets like New Jersey and Maryland, the foreclosure rate “is small percentage-wise, but relative to other markets, it is high,” said Daren Blomquist, senior vice president at Attom Data Solutions.

There’s not much that servicers can do to fast-track foreclosures on properties where the borrower is still present, given that procedures involving distressed borrowers have been heavily regulated since the Great Recession. And consumers initially fought hard against fast-track foreclosure proposals due to concerns those bills would rush the process for borrowers.

“It’s interesting because the pendulum has been swinging over the last couple of years away from giving [foreclosures] more time to fast-tracking,” said Blomquist.

But today there is some consensus that fast tracking should be applied only to vacant properties, according to the Mortgage Bankers Association, which established a set of recommended principles for states to consider.

Typically, more recent bills or laws have been aimed at situations where “the borrower no longer wants to proceed with ownership,” said Scott Nowak, the MBA’s associate director of state government affairs.

Servicers usually prefer to keep a borrower in the property because that generally preserves its value, so it’s unlikely the bill would encourage servicers to oust borrowers so foreclosures could proceed faster, said Robert Klein, the chairman of Safeguard Properties and nonprofit Community Blight Solutions.

But servicers generally find that vacant foreclosure properties in particular lose value the longer they sit unsold. And vacant units can spread blight, particularly in areas where the foreclosure rate is higher.

“A vacant property is not a bottle of wine, it doesn’t get better with age,” Klein said.

The Maryland bill could shorten foreclosure timelines for nonowner-occupied vacant properties to 90 days, in a best-case scenario, Klein said.

Even with the vacancy requirement, some bills have been problematic for consumers because the definition of abandonment was more about the condition of the property than occupancy, said Geoffry Walsh, a NCLC staff attorney and the author of its fast-track report.

“Our concern has been about the definition and what’s the burden that’s put on the homeowner to rebut that the property is abandoned,” he said. He declined to comment on the Maryland bill specifically, pending further specific study of it.

The Maryland bill does include a procedure by which the last known resident of a property is notified in person that the property is entering foreclosure and given the information needed to appear in court to challenge the action.

“The homeowner has an opportunity to object at the court proceeding,” said Brian Quinn, an attorney at law firm Venable LLP.

Source: National Mortgage News

Additional Resource:

Safeguard Properties Fast-Track Legislation Resource Center

Floral Park Eyes Cash for Zombie House Maintenance

Posted on by Safeguard

Updated 7/6/17: An ordinance that would provide money for the maintenance of abandoned homes that are under foreclosure was recently adopted by the Village of Floral Park, N.Y.

Link to ordinance

Link to municipal website

Legislation Update
April 5, 2017

Floral Park officials are considering a law that would provide money for the village to maintain abandoned homes that are under foreclosure.

The new law, discussed at a public hearing Tuesday night, would require the individual, business, bank or organization foreclosing on a vacant property to pay $35,000 to the village within 45 days after foreclosure proceedings start. This deposit would be used to preserve and care for the deserted property to prevent it from falling into disrepair and becoming an eyesore, trustees said. Once a foreclosure action is discontinued, any unused funds would be returned.

“When properties in the Village of Floral Park fall vacant and become the subject of foreclosure actions, they frequently become neglected and overgrown with grass, weeds and rubbish,” Mayor Dominick Longobardi said.

This not only creates an unsightly appearance, but also impairs the ability of residents and business owners to go about their days in a “safe, clear and aesthetic environment,” Longobardi said.“The village is committed to using all legal avenues to proactively address these adverse conditions to alleviate the burden these vacant properties impose on a neighborhood,” Longobardi said.

In December 2016, New York State passed a law that requires financiers of homes, such as mortgage companies and banks, to inspect, secure, maintain and register properties that have become abandoned.

Trustee Lynn Pombonyo said the state legislation has been instrumental in helping to get tax reimbursements for work on several abandoned properties in the village, making it a “very, very important piece of legislation for us,” she said.

Longobardi said the new village law mirrors the state law, but gives the local government more control with an advance cash reserve and removes the burden from taxpayers.

The law will not only deter violations by creating a financial incentive against allowing the property to fall into disrepair, but it will also expedite the resolution of property maintenance violations when they occur and prevent increases in village spending, officials said.

The law would take effect once it’s filed with the state’s secretary of state. The village Board of Trustees tabled the law Tuesday evening, and did not say when it would vote on it.

Source: The Island Now

Live from Lebanon: It’s City Council!

Posted on by Safeguard

Land Bank Update
March 28, 2017

Two young city residents have decided to live stream Lebanon City Council meetings

It’s not exactly ready for prime time, but thanks to the initiative of some young city residents, you can now watch Lebanon City Council meetings live on Facebook.

Monday night, Royal Marti and Chris Hostetter streamed council’s 6:30 p.m. meeting live from council chambers in the Lebanon Municipal Building on their Facebook page, See-ThruCity-LebanonPa.

It was the pairs’ second webcast, the first was at Thursday’s City Council workshop meeting. A recording of that and Monday night’s meeting can now be seen on the Facebook site.

Marti, a 21-year-old HACC student running as a Democrat for City Council, said he got the idea to stream the meetings from Tony Dastra, a 20-year-old who is running for mayor of Lancaster and has been streaming that city’s council meetings for several months,

“I reached out to him and saw how he went about beginning to do this, and he gave us permission to implement the same process here in Lebanon,” Marti said.

His motivation for streaming the council is not to create a problem, Marti said, but to make City Council more accessible and transparent. It also has the added advantage of engaging with others who can comment while watching.

“Part of my platform is to promote community and youth engagement and increase our numbers in attendance at our City Council meetings,” he said after council’s meeting on Thursday. “So the main point in this is to let people see that we are going to be broadcasting it live, to promote and let people know they should come out and get involved in their communities. And allow our youth to become more educated to what is going on here in Lebanon, because I don’t think they know about it.”

Marti and Hostetter did not just show up, clip a smartphone to a tripod and begin streaming. They called Mayor Sherry Capello’s office well in advance to inform her and ask them to tell council Chairman Wiley Parker of their plan.

Capello and Parker said Monday night that they had no problem with having the meetings broadcast live, noting that the media has been recording and broadcasting parts of meetings for years.

The only reference to the streaming was a notice on the meeting agenda that stated:

“Lebanon City Council recognizes that the City of Lebanon has an obligation to permit recording or live streaming of meetings. Council will permit videotaping, live streaming, and audio recording of meetings; however, Council is reserving the right to establish an ongoing policy for purposes of insuring accuracy, fairness and the integrity of the meetings.”

Marti said he plans to continue streaming the meetings, whether he wins or loses a council seat, but would like to see the city take the initiative to do it on its own. Because of bandwidth issues, he has not been able to link into the city’s wifi, which is costing him money from his cellphone carrier.

Neither Parker or Capello dismissed the idea of the city webcasting council meetings, which could be done on a Facebook page the city recently set up, City-of-Lebanon-PA-Government. But expanding the city’s bandwidth must first be resolved.

“We are going to have to get that situation with our internet provider squared away and then once we are there then I think we can make a more rational, reasoned decision about where we go from there,” Parker said.

Capello also said that there were other security issues to be resolved: The existing system filters internet access to prevent employees from linking to Facebook and other social media sites while at work. A new wifi link would have to allow that but also be secure to prevent hacking into the city’s system.

“We would have to run a dedicated static IP address from here down to the basement to the server. So these are all things that cost money and we need to think them out,” she said.

So what important council action did the Facebook Live camera capture? Quite a bit actually.

Council approved a zoning change that will allow day reporting centers as a conditional use in the Office-Industrial Zone.

The action was taken to allow Pennsylvania Counseling Services to open a day reporting center in its headquarters at 200 N. Seventh Street.

The day reporting center would be a place where non-violent offenders would report on a daily basis to receive counseling and other support, as an alternative to incarceration in Lebanon County Correctional Facility.

PCS’ preferred location for the day reporting center is in an office at 624 Cumberland Street in the downtown business district. However, the Lebanon Zoning Hearing Board did not permit the behavioral counseling agency to set up there.

That ruling has been appealed and a hearing will be held in Lebanon County Common Pleas Court next month.

Monday night council also unanimously approved the establishment of a Land Bank that will allow the city to purchase delinquent properties at judicial sales, repair them and then sell them.

“This is just to add another tool in our tool box. It’s an action item from our Grow Lebanon 2020 plan to address properties that have an endless cycle of vacancy, tax delinquency, abandonment and tax foreclosure,” Capello said.

To finance the Land Bank, council agreed to give it 50 percent of city property taxes for the first five years after the improved property is sold.

The city is asking Lebanon School District and the Lebanon County Board of Commissioners to give it the same tax forgiveness.

Capello said she expects the school board to vote on the matter when it convenes in April, but has not heard from the commissioners.

Source: Lebanon Daily News

Foreclosure Process in NY Expedited by Federal Ruling

Posted on by Safeguard

Industry Update
March 13, 2017

A pivotal Federal Court decision concerning court jurisdiction for foreclosure lawsuits in New York was handed down on March 1, 2017, by Judge Nicholas G. Garaufis, United States District Judge for the Eastern District of New York.

This ruling is important because in New York, foreclosures in the state court system now routinely take up to three years to complete. The state has a system and statutory framework that outlines the procedure for the processing of New York foreclosure cases.

However, by staying out of state courts, the foreclosure process can be accelerated. “In Federal court, you don’t need to go through the state mediation settlement conference,” said Alan Weinreb, plaintiff’s attorney. “In New York state courts, all residential owner occupied properties are entitled to a settlement conference with the borrowers and the lenders, and there are procedural safeguards during the foreclosure proceeding,” he added. “That makes it slow. It’s like everything is on hold in New York. Your case can’t proceed until you go through this separate settlement conference, which could delay cases for up to a year or more.”

The petition for ruling by the court was filed by Plaintiff Avail Holding, LLC, holder of the mortgage on the foreclosed property. Defendant was Frances Ramos and several additional defendants that “may claim to have some interest in” the subject property.

The defendant, Frances Ramos, maintained that because New York has a comprehensive statutory framework to protect borrowers in residential foreclosure cases, including procedural safeguards in the law, that the Federal court should abstain from hearing these types of cases.

After an extensive consideration of New York’s statutory protections, Judge Garaufis ruled that the Federal court need not abstain from hearing this type of court case and can determine a New York residential foreclosure action, provided there is diversity jurisdiction and that the amount in controversy exceeds $75,000.

Weinreb said that to get a case heard by a Federal court, you have to prove diversity. “Diversity means the citizenship of the plaintiff is different than the citizenship of each and every defendant. Our plaintiff in this case was a Florida company,” he said. “They hold the note. Because they hold the note and they’re in Florida and it’s a New York property with New York borrowers, the citizenships are different.”

The original note on the property was secured by a mortgage which Ramos executed, acknowledged, and delivered to Mortgage Electronic Registration Systems, Inc., as nominee for First Franklin. The note and mortgage were reassigned several times before being assigned to Plaintiff Avail on November 6, 2015. Beginning in August 2010, Ramos stopped making the required monthly payments and thereby defaulted on the mortgage. Default continues to date and, as of the filing of the Complaint, Ramos owed approximately $548,653.76.

On December 11, 2015, Plaintiff began a foreclosure action in the Federal Court pursuant to New York Real Property Actions and Proceedings Law. According to Ramos, this is the third foreclosure action that Plaintiff and its predecessors have filed against her, with the first two actions being dismissed “because the plaintiff in each failed to comply with New York foreclosure law’s predicate notice requirements and other statutory protections.

Ramos’ attorneys argued that the court should abstain from adjudicating this action “in order to effectuate New York’s comprehensive regulatory scheme and consumer protections governing residential foreclosure actions, which address a foreclosure crisis of compelling interest to the State of New York.”

Plaintiff’s attorneys argued that the court has diversity jurisdiction to adjudicate this action. Instead, Ramos argued that the court should decline to exercise its jurisdiction and should dismiss the case pursuant to the abstention doctrine. Under this doctrine, however, a district court may decline to exercise or postpone the exercise of its jurisdiction in certain “exceptional circumstances.”

Defendant’s primary argument was that abstention is appropriate because “the New York state courts continue to grapple with the parameters of the good faith negotiation standard and the appropriate remedies for failure to negotiate in good faith” with respect to the settlement conferences that are mandated by state law.

Additional arguments were fielded concerning whether Ramos was entitled to a settlement conference in federal court, whether she had failed to negotiate in good faith, and whether her conduct did not constitute a meaningful effort at reaching a resolution. Plaintiffs cited cases that said, “In cases like the one at hand where state law issues are not unclear, the federal court should not abstain.”

At the end of the day, the court declined to dismiss the action based on the abstention doctrine and declared that the Defendant’s motion to dismiss was denied thus paving the way for the Federal Courts to hear New York residential foreclosure cases. Weinreb said that this case may have ramifications in other states following a similar model to New York. He thinks that attorneys will see what happened in New York and will want to bring their own federal cases in states that have similar requirements to New York. “Just be sure you have the diversity and that the amount owed is more than $75,000,” he said.

Although foreclosures in New York are declining, Weinreb said that the courts are struggling because of the time it takes to process a foreclosure in that state. Plaintiffs were represented by Alan H. Weinreb and Alyssa L. Kapner, Margolin & Weinreb Law Group, LLP. Defendant was represented by Franklin H. Romeo and Christopher Newton of Queens Legal Services.

Source: DS News

What’s So Special About a Foreclosure Special Proceeding?

Posted on by Safeguard

Industry Update
February 1, 2017

The North Carolina Supreme Court recently clarified that the North Carolina Rules of Civil Procedure and doctrines of res judicata and collateral estoppel do not apply to a non-judicial foreclosure special proceeding.  This is welcome news for lenders because it removes the specter of discovery obligations during foreclosure proceedings and gives lenders multiple chances to overcome foreclosure defects.

Civil Actions and Special Proceedings

To understand the decision, it helps to know a little about court actions in North Carolina.  They generally are civil actions or special proceedings.  A civil action is a typical lawsuit before a trial judge.  A plaintiff files a complaint against a defendant, the defendant answers, and off they go.  The Rules of Civil Procedure govern a civil action and impose obligations that can be onerous.  One of the biggest for lenders is complying with discovery —depositions, answers to written questions, and document production.

Special proceedings are not lawsuits.  The clerk of court resolves special proceedings.  When a lender forecloses under the power of sale provision in a deed of trust, it engages in a non-judicial foreclosure.  Chapter 45 of the North Carolina General Statutes is the exclusive statutory framework governing non-judicial foreclosures. It establishes an efficient process to initiate, prosecute, and complete a foreclosure.

Non-Judicial Foreclosure

Chapter 45 requires the clerk to authorize a foreclosure sale if the lender establishes the existence of (1) a valid debt, (2) default, (3) the right to foreclose, (4) notice, (5) “home loan” classification and applicable pre-foreclosure notice, and (6) that the sale is not barred by the debtor’s military status.  At a foreclosure hearing, a debtor can raise objections to these six findings.  The evidentiary requirements are more relaxed than in a civil action.

If the clerk does not find evidence adequate to authorize the foreclosure sale, a lender has three options.  One, the lender can appeal to the trial court for a de novo hearing—a do-over.  Two, a lender can proceed with a judicial foreclosure—a civil action.  Or three, the lender can proceed with a new non-judicial foreclosure on a different default by the debtor.  A lender cannot proceed with a non-judicial foreclosure on the same default in which the clerk refused to authorize foreclosure.

The North Carolina Supreme Court’s Decision

In the case the North Carolina Supreme Court reviewed, In re Foreclosure of Lucks,  the lender’s substitute trustee paperwork was faulty.   Chapter 45 has a threshold requirement that the lender appoint a substitute trustee with authority to conduct the foreclosure.  As a result, the clerk dismissed the foreclosure.  The lender commenced a second non-judicial foreclosure, but the clerk ruled it was barred by res judicata.  The lender appealed to the trial court, but the court held the substitute trustee paperwork was faulty and dismissed the foreclosure “with prejudice.”

The Court determined the trial court could not dismiss the foreclosure “with prejudice.”  A “dismissal with prejudice” arises from the Rules of Civil Procedure and bars future lawsuits on the same claims.  In other words, no do-over.  Since the Rules of Civil Procedure apply to civil actions, and since a non-judicial foreclosure is not a civil action, the “dismissal with prejudice” rule does not apply to a non-judicial foreclosure.

The Court also stated that traditional doctrines of res judicata and collateral estoppel related to lawsuits do not apply.  Under the doctrine of res judicata, a final judgment on the merits in a prior action in a court of competent jurisdiction precludes a second suit involving the same claim between the same parties.  A party does not get to re-try an issue already ruled on by the court.  The Court explained that a non-judicial foreclosure arises from the contract between the lender and debtor.  If a lender fails to obtain a foreclosure order from the clerk, it is not forever barred from foreclosing its collateral.  Rather, the lender can proceed with a judicial foreclosure or with a non-judicial foreclosure on a different default by the debtor.

Conclusion

This decision is a victory for lenders.  Lenders can use it to prevent attempts by debtors to conduct discovery during a foreclosure proceeding.  Lenders also can rely on it if they are unsuccessful in a foreclosure proceeding and need to commence a second non-judicial foreclosure or a judicial foreclosure.

Source: Ward & Smith, P.A.

Washington Bills Take Aim at Abandoned Properties

Posted on by Safeguard

Updated 3/28/18: HB 2057 has been signed by Governor Jay Inslee.

Link to Governor’s website (approval confirmation)

Link to full text

Updated 3/31/17: HB 2057 and SB 5797 received the following updates:

HB 2057
IN THE SENATE

Mar 8 First reading, referred to Financial Institutions & Insurance.
Mar 14 Public hearing and executive action taken in the Senate Committee on Financial Institutions & Insurance at 8:00 AM. (Committee Materials)
FI – Majority; do pass. (Majority Report)
Mar 16 Passed to Rules Committee for second reading.
Mar 31 Placed on second reading by Rules Committee.

Link to bill

SB 5797
2017 Regular Session

Mar 8 1st substitute bill substituted (FI 17). (View 1st Substitute)
Floor amendment(s) adopted.
Rules suspended. Placed on Third Reading.
Third reading, passed; yeas, 48; nays, 0; absent, 0; excused, 1. (View 1st Engrossed) (View Roll Calls)

IN THE HOUSE

Mar 10 First reading, referred to Judiciary (Not Officially read and referred until adoption of Introduction report).
Mar 21 Public hearing in the House Committee on Judiciary at 10:00 AM. (Committee Materials)
Mar 23 Executive action taken in the House Committee on Judiciary at 1:30 PM. (Committee Materials)
JUDI – Majority; do pass. (Majority Report)
Mar 28 Referred to Rules 2 Review.

Link to bill

Updated 3/6/17: HB 2057 and SB 5797 received the following updates:

HB 2057
March 6, 2017
1st substitute bill substituted (JUDI 17). (View 1st Substitute)
Floor amendment(s) adopted.
Rules suspended. Placed on Third Reading.
Third reading, passed; yeas, 98; nays, 0; absent, 0; excused, 0. (View Roll Calls)

Link to bill 

SB 5797
March 6, 2017
Placed on second reading by Rules Committee.

Link to bill

Legislation Update
February 15, 2017

Washington

HB 2057

HB 2036

 

SB 5797

Additional Resource:

The Spokesman-Review (Spokane seeks help from the Washington Legislature to fight foreclosed ‘zombie properties’)

State Regulators Stepping Up Servicer Exams

Posted on by Safeguard

Industry Update
February 17, 2017

State mortgage examiners are focusing on systemic issues and using their broad authority under Dodd-Frank to enforce the Consumer Financial Protection Bureau’s servicing rules.

This is a sign that servicers “shouldn’t assume there’s an anti-regulatory environment,” Nanci Weissgold, a partner at the law firm Alston & Bird, said at a Mortgage Bankers Association conference on Thursday.

The number of examinations conducted by state regulators, both on an individual basis and by the Multistate Mortgage Committee, is on the rise.

There were 16 examinations of 11 institutions by the MMC in 2015 and a similar number is expected this year, she said.

The CFPB works with the MMC to coordinate examination targets, but the MMC can also operate on its own.

Meanwhile, a number of states are stepping in with new regulations. Maryland is taking comments until March 6 on a proposal covering servicer record retention as well as the transfer of mortgage servicing rights, she said.

States will be concentrating on the safety and soundness aspect for servicers. The Conference of State Bank Supervisors is expected to finalize standards for nonbank servicers during this year.

The Washington Department of Financial Institutions has put in capital requirements for nonbank servicers. For those that deal with loans not guaranteed by the government or the government-sponsored enterprises, they must have a net worth of between $100,000 and $1 million, based on the loans serviced, or post a $1 million surety bond.

GSE and Ginnie Mae nonbank servicers must maintain liquidity, including capital reserves, at the highest standards for the entities they hold approval at, Weissgold said.

On the federal level, while there is speculation about the future of the CFPB, the industry cannot assume the servicer regulations set to go into effect in October and April 2018 will go away, said Wade Pyun, the vice president and senior corporate counsel for U.S. Bank Home Mortgage.

“For the industry, the approach has to be that we proceed under the assumption these rules will take effect” as scheduled, he said.

Source: National Mortgage News

Shooting for the Stars

Posted on by Safeguard

Industry Update
February 20, 2017

These days, the focus on mortgage technology seems to be on the purchase side of the business. And why not? The Mortgage Bankers Association is predicting a steady increase in new mortgage originations in 2017 and 2018. And with an increase in originations, everyone seems to be focused on faster loan closings, online borrower portals, and “rocket” mortgages that compare buying a house to travel at supersonic speeds.

But as purchase volumes increase, so will servicing volume. And in a post-2008 world, servicing mortgage loans has become more than simply a function of paying taxes and escrows. In fact, the servicing sector has experienced many new business challenges—challenges that involve everything from new regulations and data security to how consumers behave online and how they expect to be treated. The challenges impact all parties to the servicing environment—lenders, borrowers, investors, and third parties.

To be sure, the key to solving these challenges from a technology standpoint is infrastructure, or the frame upon which everything is built. Building this infrastructure involves taking four critical steps. They may not seem as glamorous as a ride in a rocket, but servicers that master them can be sure to manage loans with optimal efficiency from takeoff to payoff. 

Security as a Stepping Stone

Make no bones about it—security is the most important thing for servicing infrastructure. Borrower and investor information is sacred to the mortgage servicer, and the technology to keep that information secure is just as important, if not more, than the accuracy in reporting it. After all, if the mortgage industry can’t guarantee that a customer’s financial information is safe, it really doesn’t matter how great the origination went. 

But security is vastly different than it was 10 years ago, when many companies housed large servers on site. Instead, there are service providers that provide a cloud-based infrastructure that is scalable based on business needs. Security needs to be a key aspect of this cloud-based infrastructure.

In any business, security protects the core infrastructure—that is, the hardware, software, networking, and facilities that are running services. A servicer’s core infrastructure must provide the flexibility to launch new products or services efficiently in a way that protects data. As a result, the infrastructure becomes a fluid asset, just as information going in and out of mortgage servicing systems is a fluid asset.

Using software and hardware to configure managed services, such as desktop environments, will provide the best security practices and IT security standards, preventing the cyber-hacker from gaining access to valuable data.

Security, however, is more than simply tying together hardware and software. As mortgage servicing volume increases and decreases, the mortgage servicer must grow, shrink, and adapt its consumption of services. Growth means higher demands for security both inside and outside of the cyber world. Likewise, reduced demand from loss mitigation, short sales, and loan resolutions demands a flexible infrastructure that lowers costs but maintains the same level of security necessary for current loan volume.

Empowering the Buyer

The 21st century mortgage servicer must aspire to be the Uber or iPhone of servicing. Giving borrowers and investors the wherewithal to get what they want at their own preference and convenience has to be the “new normal” in mortgage servicing.

Just as Quicken’s rocket mortgage product set new standards for how consumers experience getting a mortgage, mortgage servicers need to expedite the servicing process by putting borrower and investor convenience at the forefront—all while maintaining security of the borrower’s information.

One thing the mortgage industry has learned from the ongoing changes in the regulatory environment and consumer behavior is that consumers demand and expect a simpler method of maneuvering through the “wall” that stands in the way of gathering and accessing their own information.

As an industry, we need to make the process smoother for consumers and investors as they navigate through websites and phone systems. It means that we use security as a means for borrowers and investors to unlock a more transparent process. With a secure ID and password, borrowers, investors, and servicers should be able to enter a single website and obtain the specific data they need and are entitled to at their own convenience.

The overriding idea behind enhanced customer convenience in the servicing space is to enable borrowers—as well as investor clients—to do as much of the work themselves as they can without having to call the mortgage servicer. Borrowers, for example, should be able to view all their documents online. If servicers don’t already have an online portal, then they need to create one that lets borrowers gain instant access to all documents. This expedites the mortgage servicing process by allowing clients to self-service their own needs at their own convenience while decreasing demands on call centers.

Likewise, servicers should be able to give their borrowers the option of going paperless, instead receiving notifications in real-time via text message or email. This not only makes it more convenient for borrowers, but it’s also more cost-effective for the servicer in that it eliminates the need for printing paper documents and buying postage, not to mention the time savings involved.

In the same way, loan investors should be able to access all the information about the loans they own, wherever they want, whenever they want. That includes real-time loan performance data within their investor portals, including proprietary loan analytics, decision-making technology, and life-of-loan management. For all these reasons, it’s important for mortgage servicers to build infrastructure that does not limit but instead enables each of these capabilities.

Tech with a Touch

For various reasons, many borrowers and investors avoid self-service portals. Some people simply want to call a phone number and hear a human voice rather than remember an ID and password for every entrance into a website. Others are looking for answers they can’t find on a website or have a question on data not available in an FAQ section. Most of the time, not every conceivable question a borrower or investor client may have is answerable in an online portal.

A servicer’s infrastructure must leverage technology with human contact to solve this issue. That means making further improvements in customer service menus and adding a live chat function for those willing to stay online. Again, the main idea is to reduce the number of calls to your call centers.

For borrowers and investors who still need to hear that human voice, providing a specific point-of-contact for each borrower or investor client is crucial in today’s market. Customers should be able to discuss their issues with their dedicated loan service representative via chat, email, or telephone.

We talk about mortgage origination as a “relationship business,” but mortgage servicing also demands a relationship between the servicer, the borrower, and the investor. Making those relationships work requires dedicated service to meet the needs of the client, just as is the case in any profession. In today’s world, it also requires the speed, accuracy, and flexibility to project the greatest efficiency possible for customers so they keep coming back. The bottom line is that a servicer’s infrastructure must be built from the ground up with customer service in mind.

Rolling with the Punches

If there is one thing that is constant in our industry, it is continuous change—both regulatory change and changes in borrower and investor needs. A servicer’s infrastructure therefore needs to be agile, functional, and scalable in order to accommodate these changes.

A servicer’s work is based on customer demands, whether they’re growing or shrinking. The flexible infrastructure that today’s technology provides allows them to adjust to new regulatory restrictions more easily. Similarly, it provides servicers with the capabilities to launch new products or services more efficiently, under the umbrella of new or refined rules and regulations. Indeed, a mortgage servicer’s infrastructure should be a fluid asset, not a rigid system that can’t easily be altered to meet changing needs. Mortgage servicers must rely on them to fit into any new compliance regime, because what is true today may not be so tomorrow.

Reaching New Heights

No matter what industry they are in, a business that has solid security, stronger compliance, a high-quality customer experience, and excellent customer service will see the results on the bottom line. Mortgage servicers are no different. As long as they approach their technology infrastructure with these four critical steps in mind, there’s no reason why mortgage servicers cannot become the “rocket servicers” of 2017 and beyond.

Source: DS News

Servicing Game-Changer

Posted on by Safeguard

Industry Update
February 24, 2017

HOW FANNIE MAE’S DECISION TO REIMBURSE FOR POLYCARBONATE BOARDING IN PRE-FORECLOSURE COULD REVERSE DECADES OF BLIGHT

INTRODUCTION

For decades, the only choice servicers had when securing a vacant or abandoned property was plywood. Boarding up windows and doors with plywood was supposed to keep the asset safe, but the effect was often the opposite — the boarded-up home advertised vacancy, which invited looting and other criminal activity.

This unsightly plywood fix was bad enough in normal housing cycles, but it devastated whole communities after the financial crisis. As a tidal wave of foreclosures swept through neighborhoods across the nation, it left behind a mass of vacant and abandoned properties boarded with plywood.

Even one plywood-boarded house on a street lowers property values around it, but during the foreclosure crisis, neighborhoods in the hardest hit areas saw dozens of houses boarded with plywood. Property values in these areas plummeted, leading to more losses and more abandoned properties.

Although foreclosures are now back to pre-crisis levels in many cities, the number of plywood-boarded houses that remain continues to depress home values and stall economic recovery in many areas.

A new alternative to plywood — polycarbonate boarding — promises to reverse the cycle of blight while better securing properties. The clear industrial-grade sheet material was developed by SecureView in 2010 and has been adopted by servicers across the country. However, because polycarbonate boarding costs more on the front end, many servicers have continued to use plywood.

But in late 2016 the battle against blight got a huge shot in the arm as Fannie Mae announced that it would reimburse servicers for installing polycarbonate boarding in pre-foreclosure. This one action could prove to be a game-changer for communities throughout the nation, reversing decades of blight.

Source: HousingWire/Community Blight Solutions (Servicing Game-Changer full version)