Safeguard Properties

Elevating Emerging Leaders

Posted on by Safeguard

Editorial
February 6, 2018

Developing internal talent is beneficial in the evolving mortgage servicing industry

How do you prepare an organization for the future? How can you best address unknown business needs in two years? Five years? A decade? These are interesting questions, especially when you do not know what you do not know about the future and what it will bring.

In reality, there are many things that we must always keep an eye on. Regulations and oversight, advances in available technology, and contraction and expansion of the housing market are just a few within the mortgage servicing industry.

Training and organizational development are vital to the success of any industry-leading organization. It is imperative to maintain a team of learning and developing professionals tasked with addressing educational needs within the organization.

CUSTOMIZED TRAINING

Creating customized training courses for each position is key to effective employee development Each position in the company has a menu of mandatory operational, systems, compliance, procedural and leadership (where applicable) learning materials. Each position also has a collection of required materials to complete and a smaller collection of optional materials closely related to their unique, individual role.

A strategy that can help with the uncertainty of the future is developing the existing talent within your organization. Keeping an eye on the talent in-house is critical to developing a strong organization and building a skilled leadership team. This includes providing customized training, developing industry-based educational programs, leadership development, and identifying emerging leaders within your organization.

This type of training is foundational to each person and his or her long-term success. Each curriculum is reviewed annually and updated so that the most current and applicable material is included.

Everyone learns a specific way. To address as many learning styles as possible, it is important for a company to offer its employees a variety of delivery methods. One of the most efficient ways of delivering the material is by utilizing a multimedia library to accomplish learning goals. Safeguard Properties maintains a library of more than 6,000 videos, an online curriculum of more than 350 e-learning courses designed to educate on a wide selection of topics, as well as more than 200 different classroom and webinar offerings.

EXAMPLES OF INDUSTRY EDUCATION

Employee development is critical in the mortgage servicing industry, especially for property preservation companies tasked with keeping servicers in compliance with changing guidelines and regulations. Examples of successful employee development strategies Safeguard has implemented include in-house industry training, regularly scheduled mandatory training courses, and tracked learning.

Mortgage servicing and property preservation are such niche sections of the housing industry that there is very little off-the-shelf training content specific to their processes, procedures, and job functions. Therefore, the servicing training content must be created in-house. Our in-house created content is reviewed at least annually and updated with changes in content dictated by the industry.

Regulations and oversight are a considerable concern for the mortgage servicing industry. At Safeguard, regularly scheduled mandatory training courses are implemented to stay ahead of changes affecting how properties are serviced and preserved. All employees are required to complete two phases of annual compliance training, which keep our staff up to date on the updated and evolving rules, regulations and guidelines the industry must implement.

To execute the most effective educational experience for employees and the business itself, all learning needs to be tracked and evaluated on a regular basis through a Learning Management System (LMS). An LMS gives a company the ability to review any individual employee’s progress in real-time, in addition to identifying areas of opportunity for additional instruction. It also helps distinguish those employees who have the potential to become leaders within the company and could benefit from leadership development courses.

LEADERSHIP DEVELOPMENT

Another critical component in the growth of in-house talent is leadership development. To remain at the top of an industry, a company must have effective leaders that understand the business, its challenges, and identify change that needs to take place. From the beginning of their career as key members of the leadership team, the company should provide learning opportunities for both the experienced and inexperienced leader.

Developing those within the organization creates leaders with company and industry history, expertise, context, experience and strong management skills. In a complex and ever-changing industry like mortgage servicing, history and knowledge are extremely important and the key to a successful business.

Similar to the foundational and position-based learning all employees receive, a considerable amount of effort at Safeguard is put into designing leadership development programs that are beneficial to each leader individually. Leaders are constantly exposed to new paradigms and philosophies around all the major components of being an emerging leader.

IDENTIFYING EMERGING LEADERS

In many organizations, a person is often put into a leadership role as a promotion because they did well in their individual role. On a Friday, they are doing what they have always done, adding value as an individual contributor. On Monday, they have been promoted and are now leading others. They quickly realize it is more challenging than they anticipated. Preparing these key individuals in advance, before they hit the streets, helps limit their frustration.

Safeguard devotes significant resources to assist internal leaders to become stronger and more effective. We assess and develop key individuals within the organization through a mix of formal and informal development programs, including our Emerging Leaders Program. Senior leadership annually assess all current leaders on two metrics, performance and potential. Those that rank highest in those two arenas are chosen to participate in a year-long program designed to prepare them for the next level of management challenges they are likely to encounter.

Whether it is more or new responsibility, or a new position altogether, the ELP affords the participants the opportunity to work through a pre-determined curriculum of leadership activities, stretch assignments, interactive classes and team building. The participants participate in regular meetings with their fellow program members and discuss current challenges to them and the company.

They have open discussions in a safe environment about challenges they face on all business fronts. They share ideas, experiences and challenges confronting them.

The ELP members also participate in one-on-one coaching on a regular basis with an internal coach who helps them become very self-aware of what their strengths are and how to bring them into play while managing people and processes in a very fluid and dynamic business.

CONCLUSION

Preparing current and future leaders at all levels makes any company nimble and able to address changes in industries like the mortgage servicing and property preservation industry quickly. These well-trained and developed internal leaders have had the opportunity to explore their strengths and learn new and effective management skills that will pay dividends personally for their entire careers, in addition to being a major benefit for their companies.

Industry knowledge and experience is valuable to businesses navigating through fluid and evolving industries like mortgage servicing, therefore spending time to develop existing talent pays big dividends and sets companies up to meet the future head on.

John Gonos is the director of training and development for Safeguard Properties, the nation’s leading mortgage field services provider. He can be reached at john.gonos@s.safeguardproperties.com.

Source: HousingWire ( Elevating Emerging Leaders [pdf])

Disaster Playbook

Posted on by Safeguard

Editorial
January 17, 2018

The secret to being a successful team is being prepared. For professional sports like football, that means updating and studying an extensive playbook where coaches and players keep a record of their plays or a plan of action to learn and memorize for use during a game. Playbooks serve as a mental blueprint or diagram for every player on the field. These plays are extensively practiced and reviewed before being applied during a game, so every player knows what to do when each play is called. They have specific assignments and follow them accordingly.

Like the playbooks created by football teams, the mortgage servicing industry needs to establish guidelines and continuously update them when managing their portfolios following a major storm or disaster. These guidelines will alleviate some of the challenges and answer questions when managing properties both for current loans and those in default. The most recent hurricane season was unprecedented and when coupled with disasters like the wildfires in California, a coordinated strategic approach is necessary to protect properties. Property preservation companies are on the front lines when disasters hit and offer ongoing communication and information before, during, and after a natural disaster. Progressive companies will utilize data and technology to help servicers make better business decisions.

PLAY 1: CALL ON THE FIELD
Before disasters strike, mortgage servicers look to their property preservation companies in the field to advise them on the potential path of destruction and which assets are at risk. Doing so helps servicers understand what areas may be impacted so they can prepare for sound, data-based business decisions when ordering inspections and dealing with the impact of a natural disaster.

The first line of defense is communication. Property preservation companies need to engage their mortgage servicing partners with customized, ongoing disaster updates. Researching projected impacted areas, pulling news articles on impending storms or fires, and comparing that information to the servicers’ portfolios is key to providing them with as much information as possible so they can make better business decisions.

Utilizing information from inspectors in the field narrows the scope of properties impacted and can potentially save servicers’ money on what properties actually need attention. Using damage-level mapping algorithms, companies can compare the client’s delinquent and current loan portfolios to the data of which areas were impacted using property information tied to ZIP Code assessments based on damage levels.

But analyzing data does not stop there. Once the disaster strikes, damage assessments need to be updated on a daily basis for the servicers to effectively manage their portfolios. Property preservation companies also need to get a better understanding of how clients want to interact with impacted borrowers with current loans. This is relatively unfamiliar territory for those companies and their inspector networks who typically only complete services on vacant properties. Also, many servicers choose to inspect current Federal Housing Administration loans, but investors do not pay for these additional inspections. Property preservation companies need to work with their servicing partners on billing and whether the borrower will be assessed the cost of the inspections. Currently, Fannie Mae and Freddie Mac are the only investors that will reimburse for inspections on current assets during major storms or disasters.

In addition to understanding the interaction with borrowers, property preservation companies need to be aware of their servicing clients’ objectives and realize that ordering inspections on current loans is a major system change on their side. There is an established system in place for delinquent accounts that sets off a nearly automated workflow. However, that functionality does not typically exist for current portfolios. Another concern is ensuring inspector requests meet requirements for Fannie Mae and Freddie Mac for both current and delinquent properties to ensure proper reimbursement from the investor.

Some servicers also give allowables for relief orders to assist borrowers if the property is current and occupied and to aid delinquent properties in damage mitigation. This includes things like pulling out carpet before mold growth. Property preservation companies can help borrowers find a contractor who can perform those services quickly.

After a major disaster, it is critical for property preservation companies to have regular conversations with their servicing clients to ensure everyone has the latest information and is on the same page. An effective best practice after the disaster hits is for the preservation company to host industry calls so their staff can have direct conversations with key people in the servicing world.

The purpose of these calls is to provide the latest impact update and assist mortgage servicers on when and where to order inspections to aid in cost control. It also helps in sharing resources and capacities in completing these additional inspections. The call also serves as a way to update servicers on what it really looks like on the ground after the storm. Servicing clients can ask questions, voice concerns, and collaborate in developing best practices to manage these added inspections and services. They can also learn more about the technology, data, and mapping tools that will help them in determining next steps and the course of action following a major disaster.

PLAY 2: HAVING THE RIGHT EQUIPMENT
Technology and data are the key attributes to effective disaster management before, during, and after a disaster. Mortgage servicers are looking to assess the damage to both their current and delinquent properties as quickly as possible. But this is a challenge, especially in cases like Puerto Rico following Hurricane Maria last September, when many of the impacted areas were inaccessible because of downed trees and power lines, and washed-out or closed bridges and roads.

Overhead imaging serves as an alternative when property preservation inspectors cannot access properties in areas impacted by disasters. Satellite and airplane flyovers are very expensive and require third-party assistance. The use of drones in property preservation has been a topic of interest in recent years. They served as additional components in information and image gathering after the string of hurricanes in Texas, Florida, and especially Puerto Rico in 2017. Property preservation companies’ inspector networks were able to utilize them as a cost-effective way to perform initial damage assessments.

Utilizing the imagery captured both overhead by drones and through their inspector networks, property preservation companies can overlay it geographically. Client portfolio information and satellite imagery are imported into mapping tools to determine which properties were potentially affected. Information from the U.S. Geographical Survey (USGS) is utilized for information on conditions such as wind speeds and flooding. The servicers use that analysis to address their portfolios and proactively assist their customers.

Mobile technology and smart scripting play an important role in assessing property damage following a major disaster. The scripts can easily be adjusted to ensure inspectors gather the appropriate information and photos. That information comes into the property preservation company’s automated workflow system and the damage is assessed quickly to determine which properties require immediate attention. Servicers are notified of the results quickly and advised on how to proceed.

In addition to delinquent properties they normally service, preservation companies also need to geocode servicers’ properties that have current loans. They typically will utilize longitude and latitude coordinates from the address to identify the property’s geolocation, a process similar to locating and performing services on a vacant or abandoned property. This creates a pin on the map to provide an intricate overlay identifying sectors that are damaged, with data with data sourced from the inspectors’ mobile devices. Property damage is categorized as light, moderate, or heavy and is sent to the servicer to help establish the best course of action. Heat maps are created based on inspection data as a visual aid for servicers, along with custom reports to help assess property damage.

An important thing to note after major disasters strike is that inspection volumes increase dramatically for property preservation companies. In some cases, this means an almost 1,000 percent increase in the number of inspections per month. To prepare, the preservation companies’ systems and infra-structure must be built to rapidly scale up. This also is the case for the preservation companies’ inspector and contractor networks, who face additional increases and challenges when a disaster occurs.

PLAY 3: BUILDING YOUR SPECIAL TEAMS
Following the storms or disasters, property preservation companies need to assess the needs of their inspector and contractor networks in that area. They should evaluate capacity, number of crews available, and other resources needed. Often, because those inspectors and contractors in the area of the storms or disasters have been impacted themselves, preservation companies need to reallocate resources—move internal staff or field quality control (FQC) representatives into impacted areas or relocate inspectors from other areas to assist for an estimated 30 to 60 days.

Internal staff members from preservation companies are there to help with business continuity within the existing network when disasters strike. They ensure vendors have what they need in the field, including generators, clearboarding, and cleaning supplies. In Puerto Rico, FQC representatives took satellite backpacks with built-in Wi-Fi to inspectors to help submit inspection results and photos. However, it is almost impossible to prepare for a Puerto Rico-type disaster. The FQC representatives had difficulty finding hotels or condos with electricity and running water. Many of the hotels were using generators that had to be shut down for several hours a day for maintenance. While in Puerto Rico, Safeguard’s eight FQC representatives hosted multiple on-site recruiting events for the company’s contractors in the area. They also offered training for current contractors filling in as inspectors and for those who had been recruited.

But all of the added help and supplies are not without an additional cost. Postimpact surge pricing or flexible prices for products or services based on current market demands include the costs that out-of-area vendors incur because they are working remotely and must pay for things like hotel stays and food, and may take extra time for the inspections because they do not know the area very well. Also, the scope of inspection is greater after a disaster or major storm, and there are limited supplies or increases in daily expenses, like fuel, due to shortages.

Several weeks after a major storm or disaster, property preservation companies prepare to complete insurance loss inspections for their mortgage servicing partners. Those borrowers who intend on remaining in their properties typically receive insurance money to make repairs. Property preservation companies complete inspections to verify the progress of the repairs on behalf of their mortgage servicing partners.

INDUSTRY-WIDE PLAYBOOK NEEDED
Managing portfolios following major disasters is a challenge for mortgage servicers and their property preservation partners. Properties with current loans are particularly challenging because there are no guidelines or rules put in place like there are for vacant and abandoned properties. Questions arise such as, Should inspections be completed during the 90-day forbearance period? What about the initial secure? And will the investors reimburse for inspections on current assets during major disasters?

The industry needs to establish a disaster playbook to address these complex issues and to be proactive before disasters hit. This serves as a good opportunity for investors and the industry to come together to draft formal policies addressing current and delinquent loans beyond standard property preservation guidelines when a disaster occurs. Mortgage servicers and their property preservation partners also need to continue to work with the investors so we are calling the right plays in the event of a natural disaster.

Source: DS News (Disaster Playbook [pdf])

Evolution of Cybersecurity

Posted on by Safeguard

Editorial
November 30, 2017

Editor’s note: This story was originally featured in the November issue of DS News, out now.

Long before Darwin’s theories and his book Origin of the Species was released, humans realized that the key to survival was adaptation. When the environment changed, those who were able to change along with it survived, those who were not perished. In today’s age of electronic communication, virtual meetings, cyber wallets, and cyber terrorism, the validity of the statement is acknowledged, and the realization that companies need to be more vigilant protecting their electronic environments. Those companies in high-profile industries such as finance, aerospace, military, and others–including housing and mortgage servicing—need to be more aggressive as the risks are generally higher when handling and storing confidential data.

Cryptography Has a Limited Lifecycle

Given the massive data breach Equifax experienced recently, implementing encryption algorithms—or the process of transforming plain text into encrypted text for the purpose of securing electronic data when it is transported over networks—based on the lowest strength encryption that has not yet been exploited may not be the wisest course of action. It does not make sense to base security protocols on the lowest level of Federal Information Processing Standards (FIPS). If companies are adopting new controls based on today’s industry encryption standards, they should have a valid reason for doing so, and understand the implications of that decision. After all, the time involved in the decision-making process can be quite extensive. There is research that takes place to evaluate the issue, requirements and design, RFPs, testing, implementation, and more. This can be a costly process and companies should not exhaust all the time and resources necessary only to adopt algorithms that are here for a short period. They should be implementing protocols that will not be deprecated for at least the next eight to 10 years. This is one of the reasons why certifying authorities such as Verisign, Thawte, and others limit the number of years users may purchase a website certificate. Major institutions may only implement certificates whose expiration date is two years or less.

When implementing encryption algorithms, companies should consider the effective lifetime of those controls, also taking into consideration the possible time it would take to exploit them. Current standards, such as FIPS, which were developed years ago, are meant as guidelines for security compliance. Those new to security may reference these standards as a rough posture assessment of their systems but this will only lead to frequent changes of the system’s architecture when standards change. For example, FIPS 140-2, which is still used to ensure companies are following proper security precautions, was implemented in May 2001. While there were proposed updates to this standard, they were never adopted:

  • January 2005 – Federal Register announced development of FIPS 140-3 Cryptographic Modules
  • July 13, 2007 – Federal Register released the draft of Cryptographic Modules
  • December 2009 – a revised draft was released
  • August 2012 – there was a request for additional comments to FIPS 140-3

This process continued until the FIPS 140-3 update died, likely because some of the recommendations within it were out of date and already compromised. Still information security teams and the companies they work for are left with an antiquated standard of FIPS 140-2.

There have been thousands of security breaches and advances since that time, yet to be compliant, companies merely need to meet a 16-year old standard. To survive the onslaught of cyber attacks that continue to plague all industries, companies must be increasingly more vigilant. Do not wait for standards to be set for the industry but adopt tougher security protocols, encryption algorithms, and procedures before the current ones are exploited.

In an industry like mortgage servicing where the compliance and regulatory requirements have changed dramatically since the 2008 mortgage crisis—including increased oversight and reporting of breaches—what are companies that support the industry, like mortgage field services, to do? Adopt a security-centric view of the industry and monitor, adapt, and react quickly to changes. The mortgage field services industry has an opportunity to help lead the way for its mortgage servicing clients, rather than waiting for directions from them on security protocols.

Partner with Business/Operations

An important lesson that can be learned from larger corporations regarding security is that they have already adopted the practice of including security advisors at their decision-making tables. New initiatives should go through a threat management evaluation in the same way that they are evaluated for fiscal viability and feasibility. If adding that new functionality to an application could compromise security and expose the company to the possibility of a breach, is it really worth the consequences? Regardless of the answer, the important concept is the evaluation process. Companies need to understand and weigh the implications of their options, good and bad, to reach an informed decision. In many organizations, security is still viewed as a necessary evil, rather than as a welcomed partner. In part, this is because security is often seen as an obstruction to new functionality in information technology. When properly aligned with other business interests, the offering of alternative, secure ways to implement business objectives actually foster the collaborative and beneficial relationship.

Monitor and Stay Vigilant

A large part of the critical security process is staying up-to-date on the latest trends and vulnerabilities. In the past 10 years, there has been a growing segment of the information security industry that offers services ranging from incident response retainer to virtual chief information security officers (CISOs), and of course, monitoring needs. These external companies have highly qualified and experienced staff that can monitor network traffic reactions to possible intrusion. They offer an alternative to an in-house-developed Security Operations Center (SOC) for those organizations that do not have the expertise themselves.

Regardless of how monitoring is accomplished, it is imperative that it takes place. Internal monitoring via security information and event management (SIEM) can give a holistic view of a company’s network and systems, and alert security officers to anomalies and suspicious activity.

Monitoring of threat activity is as important as the monitoring of internal events. To determine if the various software and systems that are deployed within a company’s environment are vulnerable to attack, it must be aware of the versions of code and firmware it is running. Remember to review all of the company’s systems and software, old and new. While new code may have a few bugs, often-new vulnerabilities are found within very-old code that has been used successfully for years. There is greater risk with the older code because new software is regularly built on old code libraries and segments, and companies may be unknowingly susceptible to the exploits.

There are numerous services and websites that can be used to identify the latest breaches, attacks, and vulnerabilities. Some of these sites include:

  • US-Cert.gov
  • Exploit-DB.com
  • Sans newsbites and @risk
  • Nist.gov
  • ZeroDayInitiative.com (announcements for zero-day vulnerabilities are on their Twitter feed)
  • DataBreachToday.com
  • Snopes.com
  • Symantec.com
  • Various manufacturers’ sites

It is important to be aware of new vulnerabilities because once they are discovered, it is only a matter of time before they will be used by hackers to try and compromise unsuspecting networks.

React and Remediate

After implementing all of the proper controls and toughest encryption on the best gear available, it is time to rest easy, correct? Not exactly. As identified in monitoring protocols, there are vulnerabilities found in both new and old code daily. Subscriptions to the cybersecurity lists such as US-CERT and others confirm this, and set off a chain reaction of events that trigger the next course of action—remediation.

Once these vulnerabilities have been identified and posted, companies only have a small amount of time to patch their systems. This is the part where reaction time is critical. The longer systems remain unpatched from new vulnerabilities, the greater the odds that one of these vulnerabilities may affect the business. There are various published standards for remediation time based on the severity of the vulnerability and its prevalence in the wild. The times generally range from several days for zero- day vulnerabilities, and as the severity decreases, the time allowed to patch increases.

Depending on the complexity of applying the necessary patches, firmware, and updates, the company may be vulnerable for longer than necessary. In some cases, companies may opt to wait before applying the patches from fear that they may adversely affect their systems. This is a standard methodology adopted by information technology experts to watch new software and only adopt it once the bugs and inconsistencies have been worked out. But it is a dangerous gamble when racing a clock and betting on the fact that the company will not be targeted.

Adapt or Die

To make assumptions based on the idea that hackers only target large businesses and companies that have high-value data like the mortgage servicing industry is wrong. Examining recent attacks of “wannacry” and “notPetya,” the groups that released these did not target individuals but rather sent them out in a wide scope. The malicious actors themselves were unaware of how successful their worldwide cyber attack would be, and were not prepared for the fallout of the attack. Some of the 200,000 victims of the ransomware probably thought that they would have sufficient time to remediate their systems. This is why companies cannot afford to hesitate too long in this new cyber landscape. They should be fostering the security- lead decision-making process and implementing new procedures within these companies to facilitate more aggressive patch cycles, and decrease the amount of time to remediate new vulnerabilities.

Those in the mortgage field services industry know that their servicing clients are well aware of the same vulnerabilities when they are released, and how damaging they can be. These clients, as part of their own due diligence, are reaching out to their field services partners and requesting posture assessments of new threats. This is why field services companies and their security leaders should not only be first to evaluate, mitigate, and remediate environments, but also take the lead and proactively inform their servicing partners of their positions to demonstrate that they understand the risks, and take them seriously.

Exceptions to the Rule

As mentioned, there are times when it is necessary to maintain deprecated and sometimes older standards, but this should be done with full understanding of the risks involved. There also should be mitigating controls in place to monitor the systems and events for anomalous activity that could be indicative of intruders and malicious software. One reason to maintain old standards is the interoperability with outside parties that have a more complex environment, or are not as agile, and are currently on old standards. Of course while the current situation may dictate this position, companies should have a plan to migrate to supported protocols at the first opportunity. Another case may be to support a legacy framework within a company that is incompatible with the newest protocols. These are only a couple exceptions, and while each situation may be unique, reasons exist for not upgrading as quickly as needed. Those entities that are looking to subvert a company’s network and systems are counting on complacency.

The mortgage servicing industry and its field services partners can no longer afford to merely meet security compliance standards, but should aggressively be pursuing a more stringent security posture. When implementing cryptographic controls, companies should opt for the highest common level that their environment can support to afford the most time before change becomes necessary. The cyber landscape has changed from the targeted attacks, and companies need to become more adaptable in preventing them.

Source: DS News

Additional Resource:

DS News (Evolution of Cybersecurity PDF)

Surmounting the Roadblocks to FHA Conveyance

Posted on by Safeguard

Editorial
October 31, 2017

The inability to adopt and revise procedures that bog down the conveyance process will undoubtedly cost servicers millions of dollars in non-reimbursable expenses.

A recent survey of mortgage servicers completed by the Collingwood Group and Five Star Institute, the Mortgage Industry Outlook Report, revealed that 39% of respondents from various levels of the housing finance industry named fulfillment of Federal Housing Administration (FHA) property preservation and conveyance requirements as their biggest FHA servicing challenge.

The survey explained that “FHA’s program rules are different from Fannie Mae’s and Freddie Mac’s, requiring servicers to dedicate additional resources to property maintenance from the time of foreclosure until the property is conveyed to FHA – a time period that varies depending on the situation. In some markets, preserving and protecting properties for an extended period requires aggressive and diligent surveillance that is expensive and difficult. The additional demands on the servicer are costly and introduce opportunities for noncompliance that don’t exist in the GSE servicing space, where properties are conveyed to the GSEs immediately following foreclosure.”

At the time the survey was distributed, FHA servicers were experiencing an increase in reconveyance letters and mortgagee neglect denials citing foreclosure delays from the U.S. Department of Housing and Urban Development (HUD) and its mortgagee compliance management (MCM) vendor. Undoubtedly, these sudden increases in reconveyances, and the costs associated with them, are factors reflected in the survey results.

Reconveyances are one of the biggest challenges mortgage servicers face. Coupled with constant changes in leadership, guidelines, HUD vendors and the interpretations of regulations, servicers face some significant hurdles with FHA loans. While these revisions to regulatory requirements keep the servicing and property preservation industry on their toes, the resistance and/ or inability to efficiently make changes within the organization tend to halt progress and affect the timely conveyance of properties to FHA.

Partnerships lead to better policies

There are many reasons that organizations resist change – risk, costs, and uncertainty. As is human nature, it is always easier to “do things the way we have always done them.” With recent guidance from FHA prohibiting reimbursement of property preservation and inspection costs incurred after the convey due date, the inability to adopt and revise procedures that bog down the conveyance process will undoubtedly cost servicers millions of dollars in non-reimbursable expenses. Partnering with your property preservation vendor and adopting best practices communicated by FHA staff and their MCM vendor is crucial in reducing or eliminating out-of-pocket expenses.

To reduce the costs of servicing FHA loans and conveying in a timely fashion, policies regarding personal property removal, the repair of insurable damages, and waiting for bid approval from the MCM are in need of re-examination. Servicers need to adjust their operating policies to complement the expectations of HUD in order to avoid conveyance delays. Additionally, pre-foreclosure-sale FHA loans have historically taken a back seat to the management of post-sale assets within servicers’ shops. Servicers could realize significant cost savings from taking another look at the prioritization of pre-sale assets – specifically in the areas of personal property, insurable repairs, servicing rules and insurance claim settlements.

Personal property matrix

Removing personal property following the foreclosure sale is one area where costs can rise and conveyances can experience delays, but procedures already exist to manage this issue. According to the most recent eviction matrix published by the USFN, the vast majority of states do not prohibit servicers from self-help to remove abandoned property following foreclosure sale. Despite this, the majority of servicers do not utilize the FHA allowable to remove and store these items following foreclosure sale.

With the release of HUD ML 2010-18, servicers were required prior to HUD conveyance to remove all debris and personals, and place properties into broom-swept condition. This was a significant change from prior conveyance requirements and sparked debate between HUD and servicers with regard to shifting liability and risk of an increase in litigation from borrowers citing missing personal property.

HUD reacted quickly with the release of a frequently asked questions (FAQ) providing servicers with a $300 allowable for reimbursement to store abandoned personals in lieu of disposal. The FAQ provided guidance to follow local laws with regard to the removal, disposal and/or storage of abandoned personals. This guidance afforded servicers the ability to pursue self-help and remove the items in effort to convey the property to HUD more quickly. Despite the accommodation from HUD, the allowable and guidance are not common practice even today, seven years after the new requirement for broom swept condition.

Alternatively, servicers seek guidance from counsel as to whether or not to pursue an eviction of personal property on a case-by-case basis. This delays conveyance and leaves the property subject to new damages, complaints from neighbors and potential code violations. The absence of a clear, consistently executed matrix regarding the removal, disposal or storage of abandoned personal property leads to unnecessary bids submitted to HUD, ambiguity in the definition of possession, and confusion surrounding the calculation of the conveyance due date.

Establishing a personal property matrix and providing guidance to your property preservation vendor to execute is a prerequisite for timely conveyance. Likewise, a well-researched, defined policy serves as a defense if legal complaints ensue.

Insurable repairs

Delaying repair of insurable damages until after foreclosure sale is another missed opportunity for timely conveyance. When I joined the industry in 2001, it was standard practice to hold insurance proceeds in escrow and not commence repairs until after the foreclosure sale. Following several industry working group discussions in 2011 and 2012 and a reevaluation of the FHA servicing regulations, HUD staff and their MCM vendor effectively instituted parameters and expectations for servicers to commence repairs upon receipt of insurance funds and not wait for foreclosure sale.

The MCM vendor continues to deny extension requests submitted for more time to repair when supporting documentation does not support repairs commencing immediately upon settlement of the insurance claim. Furthermore, most insurance policies require repairs to be initiated within six months of settlement for recoverable depreciation to be paid to the insured party. Recoverable depreciation ranges from 10% to 33% of the cost to repair the property. Initiating repairs upon insurance claim settlement will improve the approval rates for extensions of time to convey and will improve the ability to recoup repair costs through recoverable depreciation.

Servicing rules

Servicing rules within organizations also can stall the conveyance of files in an effort to obtain written approval of expenses to avoid out-of-pocket costs. This is true in waiting for the insurance company to issue a check, as well as waiting for MCM approval of over-allowable requests.

While some files deserve prudent review and follow-up for large expenses, many files can efficiently move through the process with the establishment of a standard cost-benefit analysis. We have worked with several clients to establish standard cost forms that account for unpaid principal balance, cost of repairs for conveyance condition, pending insurance funds, possibility of HUD reimbursement, and expenditures-to-date. Utilization of a standard template can empower front-line staff to make decisions faster and avoid bottlenecks of management reviews required within the servicing shop.

HUD staff have verbalized the expectation that maintenance services and the over-allowable processes are independent functions, and thus, the need for over-allowable approval is not required to proceed with work necessary for conveyance condition. The over-allowable process may be prudent for exceptional cases, where the repairs are extensive and/or may exceed the outstanding principal balance or demolition may be in order. However, the vast majority of over-allowable requests are for routine property preservation items often approved by the MCM. Awaiting HUD approval for routine property preservation expenses leads to new vandalism, newly dumped debris, and even neighbor and code officer complaints. HUD staff recommends completing necessary work and asking for over-allowable approval as an independent function, which will lead to more timely conveyance.

Insurance claim settlements

Another missed opportunity for timely conveyance is awaiting insurance claim settlement before repairing to conveyance condition. While exceptions may be at play, it is highly recommended to file the insurance claim and grant access to the insurance adjuster and then commence repairs for conveyance condition.

Your property preservation vendor should be utilizing the same insurance tools to estimate the costs of repairs and photos of repairs in progress and of completed repairs. This will expedite the supplemental process, if needed. Additionally, commencing repairs immediately following the adjuster’s inspection will inhibit further deterioration for many perils, including storm damage, roof damage, sewer back-up, sump pump failure, etc. – ultimately leading to a cost savings. Servicers should establish a standard for perils, costs and timelines for their preservation vendors to utilize as delegated authority to repair to conveyance condition, further reducing the number of exceptions their leadership needs to review and approve.

Servicers should reevaluate the time frames of when to begin management of post-foreclosure sale files. With the expansion of the Claims Without Conveyance of Title (CWCOT) program, allowing servicers to bid market value at the scheduled sale, appraisals are requested well in advance of the scheduled sale and properties reviewed for inclusion in the CWCOT program.

This is the time to review the file for outstanding impediments to conveyance condition and status of over-allowable requests, in addition to hazard insurance recovery or repairs. The single largest driver of denied over-allowable requests from HUD is missed due diligence time frames causing the property to be overdue for conveyance.

Assessing the property conditions and denied over-allowable requests 60 days prior to scheduled foreclosure sale and providing authorization to your property preservation vendor will result in 20 or more days shaved off the time frame to place in conveyance condition and greatly reduce out-of-pocket costs associated with missing the due date for conveyance.

Adoption of change is often a lengthy and difficult process when significant dollars are at stake. However, as President Bill Clinton once said, “The price of doing the same old thing is far higher than the price of change.” Implementing the best practices verbalized by FHA staff and their MCM vendor and partnering with your property preservation vendor is crucial in reducing or eliminating out-of-pocket expenses related to FHA conveyances. In doing so, we can tackle the other challenges we face as an industry.

Kellie Chambers is the assistant vice president of business development and investor relations for Safeguard Properties, the mortgage field services leader in the U.S. She can be reached at kellie.chambers@s.safeguardproperties.com.

Source: Servicing Management ( Surmounting the Roadblocks to FHA Conveyance PDF)

Never Too Big to Serve

Posted on by Safeguard

Editorial
July 13, 2017

Successful field services companies are designed for the high-touch needs of small servicers

The mortgage servicing industry has seen a seismic shift over the past few years as a result of the enhanced regulatory environment brought on by the housing crisis. As a result of these new regulations and restrictions, many financial institutions have been exiting loan servicing and there has been a proliferation of nonbank servicers entering the market and/or buying portfolios or servicing rights and gaining a greater market share.

Today, servicers are tasked with many obligations, including managing field services activities, dealing with oversight and compliance mandates, managing continual changes within the regulatory environment, unfunded mandates resulting in expansion of responsibilities, and ensuring adherence to strict budgets and heightened cost controls.

For years, national field services companies have been working in partnership with both large and small servicing shops to provide a comprehensive default services outsourcing model that enables the smaller servicing organizations to deploy compliant practices in a timely and cost-effective manner.

National field services providers, like Safeguard Properties, have developed tools and resources that provide value-added service and information regardless of a client’s portfolio size.

While some servicers see national field services companies as too large to handle their portfolios efficiently, nothing could be further from the truth.

For example, at Safeguard, our clients range from smaller local banks, small servicers and sub servicers, governmental agencies and large blue chip financial institutions.

Under a true outsourcing model, smaller volume servicers have the benefit of operating in a state-of-the-art default servicing platform environment at no additional cost to them; with the customer centric focus and resources one would expect from a local provider.

These benefits can provide value to the smaller volume servicers in that they can share risk with their field services provider by ensuring timeliness of service, compliance with applicable rules and regulations, as well as leveraging comprehensive data analytics and a cutting edge technology platform.

These servicers are enabled to do more with less as they outsource typical in-house functions to their field services provider.

Field services companies need to remain committed to providing the highest level of service to their mortgage servicing clients regardless of their portfolio size and to ensure that all work is performed in accordance with their clients’ agreed-upon criteria and investor/GSE requirements.

Keeping Servicers in Compliance through Outsourcing
There has been much change in the servicing industry since the housing crisis. Numerous regulations have been enacted by Dodd-Frank, Federal Housing Administration, Fannie Mae, Freddie Mac, Veterans Administration, and the Consumer Financial Protection Bureau (CFPB), designed to protect borrowers and provide guidelines for those maintaining defaulted inventory.

This has put many organizations in a situation where they do not have the resources to comply with these unfunded mandates. A full outsourcing model provided by a field services company enables smaller servicers to maintain compliance without any additional cost.

For instance, an outsourcing model with a field services company typically provides for some or all of the following activities:

  • Managing and tracking of allowables to ensure efficient preservation of properties in compliance with investor guidelines
  • Managing the bid process, when applicable, by submitting bids to the investor using the investor’s bid submission program (such as P260/Yardi for FHA loans)
  • Ensuring conveyance extensions are submitted and managed when necessary
  • Managing cost-to-date information
  • Managing and remediating customer complaints and ensuring proper tracking, disposition, and auditability of results

An added benefit is that the servicer can leverage their field services provider’s relationships with communities around the country to efficiently address code violation issues enhancing their reputation in the community and can take advantage of the company’s industry knowledge where quite often they have helped to shape policies, regulations and guidelines through direct partnership or committee participation with investors and GSEs.

By leveraging a field services company’s outsourcing options, mortgage servicing organizations have been able to decrease the size of their internal default staff, saving time and money, as they fulfill their servicing responsibilities.

Technology for Efficient Operations
Investing in new technology has been key for field services companies in providing innovative solutions. Through mobile adoption by vendors, investing in data centers and piloting new technology, like video in the field, field services companies continue to ensure quality and innovation for the mortgage servicing industry: a major benefit for all sizes of servicing organizations.

When deciding on a partner to work with, servicers should pay particular attention to determine if the field services company:

  • Has invested in latest infrastructure, security, applications, and database technologies;
  • Has deployed business process management systems that provide order and loan level processing automation to ensure efficient service delivery;
  • Has deployed mobile technologies to provide timely, comprehensive, and accurate property results from the field;
  • Offers full-service, secure Internet portals for servicers and contractors with access for ordering, communicating, reviewing work order/photo results and reporting;
  • Utilizes integrated data warehousing capabilities that provides web-based reporting, extensive portfolio data analytics and automated report scheduling capabilities;
  • Has integration plug-ins to communicate with third-party order processing and invoicing platforms such as Aspen Grove, Equator, Black Knight, and iClear;
  • Utilizes an incident management platform to accurately track client requests and compliance status;
  • Has state-of-the-art data centers with 24/7 monitoring; and
  • Utilizes a centralized call center supporting multiple service center locations.

Of particular value to servicers, both large and small, is having a secure client portal. This comprehensive web-based site should offer a wide array of reports that can be scheduled to run on a daily, weekly or monthly basis.

These reports can be configured to track and report on problem resolution activities and change requests. Once access is granted, each person should have historical loan level information of the services conducted at the property including work orders and updates, photo documentation and audit support, detail of all bids provided and their disposition, expenditure details including cost-to-date and problem-resolution timelines.

Conclusion
Mortgage servicers, both large and small, have come to rely on their field services companies as an extension of their own staff’s duties and responsibilities.

In times of tight budgets and cost containment initiatives, it is imperative that that smaller servicing organizations leverage the tools and resources that a national field services company can provide.

As compliance mandates continue to proliferate, it is only prudent to investigate what your field services company provides today and determine if the value add technology and outsourcing services that a national provider provides as part of their suite of services can benefit you as well.

Source: HousingWire (Never Too Big to Serve pdf)

Beyond Property Preservation: Proactively Tracking Legislation

Posted on by Safeguard

Editorial
June, 28 2017

Airing from 2001 to 2010, the Fox television show “24” has become permanently ingrained in the fiber of American pop culture, as it firmly established itself as a highly lauded, critical and commercial hit during its record-breaking, eight-season run.

The show, featuring actor Kiefer Sutherland as highly skilled, no-nonsense government agent Jack Bauer, employed a unique narration by having events unfold in real time. As a result, each episode (featuring a clock that would appear on screen) covered one hour of a full day in Bauer’s life, with a 24-episode season leading up to the completion of that time period and subsequent story arc.

Working for the fictional American Counter Terrorist Unit, Bauer was constantly placed in harrowing life-or-death situations while combating a host of villains and criminal organizations. To foil these threats – and stay alive – Bauer relied on timely and accurate information provided by his team.

An interesting parallel can be distinguished between the show and the mortgage field services industry – gunplay and daring rescue operations aside, of course. The practice of providing fast and accurate information to mortgage servicers by field services companies is a critical component of quality customer service and aids in strengthening the industry as a whole.

Local governments across the country draft and enact laws that directly impact the industry. Field services companies should consider the importance of actively tracking these types of legislation. Proactive field services companies have an opportunity to serve as a resource for acquiring critical information and taking the concept of protecting their clients’ interests to the next level. This includes not only arming servicers with legislative information, but also providing them with insight into how this will affect their businesses. An opportunity may present itself for them to get in front of any issues and reach out to that particular government – producing positive communication and mitigating some of the consequences that can arise from the frustrations of local governments.

Beyond the value of providing information to clients concerning legislation that may directly affect them, some also may directly impact field services companies themselves. This has been especially evident in the last few years, with laws being drafted at the federal, state and local levels that have the power to fundamentally alter companies’ daily operations. If nothing else, this reason alone emphasizes the necessity for companies to be proactive and begin installing parameters to remain informed.

By engaging all levels of local governments directly through educational face-to-face presentations and outreach, as well as utilizing technology to communicate subject matter efficiently, field services companies can position themselves to successfully obtain and share legislative developments in near real time for the benefit of their mortgage servicing clients. Jack Bauer would be impressed.

A changing world

In the years since the Great Recession, there has been a greater emphasis on the issue of property maintenance and, in particular, vacant and abandoned properties. Additionally, there has been a push by state and municipal governments for the mortgage servicing industry to do more and alleviate increased budget strains. As new measures and programs have been adopted over the last few years, they have shown that governments are approaching these areas at different angles.

One of the types of legislation that has seen a significant level of growth since 2009 is the vacant property registration ordinance (VPRO), which has been enacted in hundreds of towns and counties across the country. VPROs allow for the creation of a registry that is maintained by either a municipality or a third-party service provider and mandates that owners of vacant properties submit property and personal contact information. The owner is then charged a variable registration fee for each property owned and must repeat annually as the registry is updated.

As outlined by the Center for Community Progress, the purpose of a VPRO can be defined by the following points:

  • “To ensure that owners of vacant properties are known to the city and other interested parties and can be reached if necessary;
  • To ensure that owners of vacant properties are aware of the obligations of ownership under relevant codes and regulations; and
  • To ensure that owners meet minimum standards of maintenance of vacant properties.

In addition, the fee structure established in the ordinance may serve additional purposes, including covering costs incurred by the municipality to deal with vacant properties and, under some circumstances, motivating owners to restore and reuse vacant properties.”

An example of a more aggressive, statewide approach to dealing with vacant properties began last year when New York State Governor Andrew M. Cuomo signed S.8159. The legislation contained a component (Part Q) that addresses vacant and abandoned properties by expediting their foreclosure, creating an electronic registry, and imposing a pre-foreclosure duty on banks and servicers to maintain them.

Legislation that aims to expedite, or “fast-track,” the foreclosure process for vacant and abandoned properties has been gaining considerable momentum as of late, and like in New York, similar laws have been enacted in several states, including Ohio, Pennsylvania and Illinois. Fast-track foreclosure laws have the power to literally cut the amount of time a property takes to complete the foreclosure process in half – in some cases from two years to three months. This difference in time frame allows a property to get back on the market and hopefully sold or rented much faster, removing it from the threat of vandalism, theft or deterioration.

Receiving widespread media coverage and publicity since its creation in 2015 has been the New York “Shame Campaign.” Championed by Assemblyman Michael Kearns and Buffalo Common Council Member Dave Franczyk, this program works to not only shed light on properties in the Buffalo area that have not had the foreclosure process completed, but also identify the appropriate loan servicer in order to spur action.

Finally, the best current example of an action that impacts both servicers and their field services companies recently played out in the Washington Supreme Court. As related pieces of legislation have already been introduced in the state, the impact of the decision will continue to reverberate across the industry.

In 2016, the case of Jordan vs. Nationstar garnered a decision that challenged the standard operating procedures of the industry. The court ruled that Washington law prohibits lenders from taking “possession” of property prior to foreclosure, regardless of language in the deed of trust. So, the lender may not take “possession” after default but before foreclosure.

In this particular case, the servicer’s vendor changed the front door lock, and the only other door was a sliding rear glass door. Therefore, there was no key the mortgagor could use to access the property without calling the servicer for a lock box code. In the court’s opinion, this constituted “possession.”

The court did not address whether it would constitute “possession” if only a secondary lock was changed and the mortgagor’s key would still work on the front door or some other door.

As the decision from Jordan vs. Nationstar, as well as the different types of legislation discussed previously, continues to pick up steam across the country, the significant effect it will have on servicers, their field services companies and communities will be strongly felt. Some servicers have stopped preserving those properties due to the decision, which will have a negative impact on neighborhoods and make it more difficult for field services companies to maintain a property once it finally goes to foreclosure. The need for communication between decision-makers and the industry they stand to impact is more important now than ever.

Outreach and education

The true core of successful legislation tracking lies in the ability of field services companies to engage all levels of local government and strive to build mutually beneficial relationships while delivering a vital educational message. Once established, these relationships will bear multifaceted fruit benefiting all connected parties by solidifying open communication channels and providing true understanding and insight.

Field services companies, including our own, which actively engage in community initiatives outreach, openly approach and create dialogue with municipal officials, code enforcement departments and elected officials. The primary goal is to establish healthy communication between corporate and community parties and ensure that best practices are shared with legislators and practitioners. This is achieved through the delivery of face-to-face presentations, providing municipalities with a high-level overview of the field services industry and its processes. As relationships advance, companies could eventually place themselves in a position to advocate on behalf of the industry and mitigate the proliferation of ordinances or legislation that intends to help consumers but has the unintended negative impact on communities. Assistance also could be provided to objectively provide guidance on ordinance text language so as to eliminate confusing or ambiguous language and promote compliance.

To reach the widest audience possible and build a healthy contact base, field services companies and servicers should participate in organizations such as the National League of Cities, the National Housing Conference and the Center for Community Progress. In turn, they should work to present at related conferences. Examples of these types of events would be the annual American Association of Code Enforcement Conference and the International Code Council Educode Conference.

As previously outlined, successful governmental relationships may present an opportunity for field services companies to provide objective input in the drafting of ordinance language. With regard to relevant legislative tracking, companies could routinely make an inquiry to contacts concerning impending measures and request to stay in the loop for timely updates. The reach and quantity of valuable information is only limited by the amount of existing jurisdictions.

It should be noted that although there is a great opportunity to collect legislative tracking data from municipalities themselves, it is by no means the only source field services companies can use to gather leads. A considerable amount of time should be devoted to research by scanning municipal websites and monitoring state houses and council chambers. Also, because of the higher level of media coverage and subsequent article availability on the Internet, companies should perform general Web searches and stay up to date on industry news.

Lastly, as regulations impacting servicers are identified, companies can also take part in calls offered by the Mortgage Bankers Association that review and discuss them at length. Call participation will not only provide pertinent education and awareness, but also serve as a platform to foster dialogue within the industry.

Communication and technology

Once the heavy lifting of implementing processes to track legislation has been completed, field services companies should focus on how to provide information as quickly and accurately as possible to clients and internal staff. This can be performed by ensuring that communication is constant and consistent, with research updates being scheduled according to legislation hearing dates, house sessions, council meeting agenda/minutes availability, etc.

Next, parameters should be set to ensure that contact lists used for alerts (email blast or otherwise) are being updated regularly. This can be achieved primarily by routinely reaching out to clients for updated individual contact information and double-checking in-house with staff to make sure all desired departments are receiving any news or updates.

Integrating technology to enhance the layout and availability of information is also something that needs to be addressed and revisited often. Larger field services companies currently employ the use of online matrices to display VPRO information. Vital information, such as an ordinance’s date of adoption, is listed, as well as a link to examine a copy of the final version of the ordinance itself to ensure authenticity. Matrices are an effective way to display large volumes of information legibly and are relatively simple to track and update. To date, our firm is tracking nearly 2,800 ordinances across the country, with new ones being added each month.

Companies also may utilize technology such as Compliance Connections, which is a platform that exists to assist local governments in identifying and communicating with a property’s current loan servicer. This service is beneficial to both parties, as it streamlines the entire communications process, helps to efficiently remediate possible violations and promotes compliance. To make this possible, trained staff members utilize proprietary, private and public databases to access the most up-to-date information available and, in turn, offer instant notifications and establish proper communication channels.

Mortgage servicers are increasingly utilizing their field services companies as a resource to provide industry information and news. Proactive companies that track relevant legislation that stands to impact the servicing industry provide a service that elevates the concept of protecting their clients’ interests. By engaging all levels of local governments, performing research and utilizing technology, field services companies can, in turn, galvanize their role in providing timely and accurate updates to their own staff and their clients – just like Jack Bauer had to rely on his team of experts for the most up-to-date information.

Michael Halpern is the director of community initiatives for field services company Safeguard Properties. He can be reached at michael.halpern@s.safeguardproperties.com.

Source: Servicing Management

Additional Resource:

Servicing Management (Beyond Property Preservation: Proactively Tracking Legislation pdf)

Changing With the Times

Posted on by Safeguard

Editorial
April 6, 2017 

Humans have changed very little over the past few thousand years. The biology and genetics of our ancestors hundreds of generations in the past differ very little from our makeup today. However, our institutions, technology, and environment have no such anchor to biology. Constant change and the embracing of technology have required our 10,000-year-old minds to act differently and become more nimble than ever before. To this challenge, we apply the discipline of change management.

Change management is a term that refers to any approach to transitioning individuals, teams, and organizations using methods intended to redirect the use of resources, business processes, budget allocations, or other modes of operation that significantly reshape a company or organization, according to Wikipedia. These types of changes often make headlines, such as when a company introduces a new enterprise resource planning system or revises reporting relationships. However, most changes are on a smaller scale but are just as impactful if done well—or poorly.

Change management as a discipline focuses on how people and teams are affected by an organizational transition. It deals with many different functions, from behavioral and social sciences to information technology and business solutions. In a project management context, change management may refer to the change control process wherein changes to the scope of a project are formally introduced and approved.

The international bestselling book Leading Change by Dr. John Paul Kotter has been incredibly influential in the field of change management. A New York Times bestselling author, Dr. Kotter is the Konosuke Matsushita Professor of Leadership, Emeritus, at the Harvard Business School and the founder of management consulting firm Kotter International. His work has earned him the reputation of an authority on change in the arenas of business and leadership. In Leading Change, Dr. Kotter outlines a practical eight-step process for change management:

Establish a sense of urgency.

Create the guiding coalition.

Develop a vision and strategy.

Communicate the change vision.

Empower employees for broad-based action.

Generate short-term wins.

Consolidate gains and produce more change.

Anchor new approaches in the culture.

Utilizing both the academic research and practical implementations of this discipline, mortgage field services companies can apply its principles as processes and guidelines to continuously evolve in the ever-changing mortgage servicing industry.

Managing Change

Working with regulators, federal agencies, state and local governments, code officials, clients, and other parties requires continued vigilance and understanding of specific, unique requirements. When a change is made at any of those entities, it manifests itself into the specific actions of field services companies’ inspector and contractor networks.

A simple change requiring language modification of a posting at a property requires the coordination of hundreds and at times, thousands of specific actors. Thus, any time field services companies have to implement a change, they must carefully consider the impact and how they manage the evolving expectations.

Field services companies roll out many changes to their inspector and contractor networks and internal users. These changes are either to optimize quality, timeliness, and/or cost or to react to changes in client or investor expectations. Following Dr. Kotter’s established process for change management, field services companies need to be prepared for changes by developing a full set of activities, some of which are not always required but are available to the team as needed. These activities are common examples:

Work order requirements reflect the new expectation.

Policy documents and job aids are updated.

Create a video to promote and explain the change.

Send a memo to the applicable inspector and/or contractor network documenting the change that serves as both an explanation of why and a user guide (or a link to a user guide).

Training sessions are scheduled for internal and external users.

Lesson is created and required on learning management systems for employees, inspectors, and contractors.

Utilize social media to broadcast the change.

Hold a conference call with internal and external participants.

Frequently asked questions generated from the call and promotion are sent out as an addendum to the memo.

One month after the initial launch, find champions or subject matter experts for the change and write a case study showing impact. Host another call.

Hard audit stop in operations for the change.

Have a backend top-down-audit-style review and enforcement of change.

Three to five months after the initial change, have an after-action review.

One of the biggest property issues field services companies and mortgage servicers face that is difficult to mitigate—mold—can benefit the most from this specific change-management approach.

Mold Policy

Mold, and the source of moisture feeding mold, is a major challenge to field services companies and property preservation. With properties often sitting vacant for many months or years, properly identifying the source and taking effective action is critical. When the new Mortgagee Letter came out for the Federal Housing Administration in February 2016, field services companies had to rethink their historical approach to identifying mold.

Establishing a new mold policy following the change-management procedures should begin with field services companies like Safeguard Properties determining how to describe the new requirements in the work order. The work order will become specific instructions to set the stage for contractors to assess the condition of the property and the resulting actions based on investor or client allowables. The mold policy needs to be specific in detail, but there are base steps:

Identify the sources of mold and moisture feeding the growth.

Utilize investor/client allowables to address the source.

Validate, using a detailed checklist, the potential causes that are not feeding the mold.

Do the work to address or bid.

Prior to the new policy, contractors were simply asked to identify mold and the source of the moisture. Far too often, “humidity/lack of circulation” was identified incorrectly as the main cause. A policy change can correct that behavior. Utilizing software like Sharepoint can aid in storing and establishing a method of version control for documents. After developing the policy and work-order requirements, field services companies should update all policy documents to establish a single source of truth for internal and external users.

Case Study

The following was identified when Safeguard developed its new mold policy utilizing the change-management process as described above:

Work-order requirements must reflect the new expectation: After establishing the policy, Safeguard updated all work orders to specifically outline the requirements, including a 13-point checklist. The work order organized all the client and investor allowables available, provided the contractor with all the information related to remaining funds, and was specific as to the photo-documentation requirements.

Policy documents and job aids are updated: The work order lays the basis for policy, but the two are interrelated. Safeguard wrote an official policy and linked it into both its internal and external document-sharing sites.

Create a video to promote and explain the change: Using the information in the work order, Safeguard works with contractors and its quality-control staff in the field to write a simple script and create an explanatory video. This video is available on Safeguard’s online learning management system. Videos, in addition to other approaches, allow the company to communicate the change in all learning styles—written, verbal, and interactive—to implement the change.

Send a memo and a user guide: Safeguard formally documents the policy change via an official memo to the contractor network. This memo is an enhanced policy document with extra photos showing examples it has gathered from the field. Also, the memo links to the videos and job aids, and it provides a schedule of events for additional learning opportunities.

Training sessions are scheduled for internal and external users: Partnering with its training department, Safeguard developed a slide deck and comprehensive assessment test to share with internal and external partners. These sessions are hosted in a classroom setting when available and by webinar when not.

Lesson is created and required on learning management systems for employees, inspectors, and contractors: After the training session is completed, the content is put into an online learning course for future employees and vendors to utilize.

Utilize social media to broadcast the change: Safeguard participates in many social media platforms. Trumpeting the information allows the company to inform all users of the change, including actual contractors in the field, their office staff, and other impacted parties. Safeguard seeks to ensure that it provides the information through as many channels as it can.

Hold a conference call with internal and external participants: After contractors have been educated on the new policy, Safeguard understands it is not perfect. It hosts a call that is proctored by a third party to review the material shared, observe, and answer questions.

Frequently asked questions (FAQs) generated from the call and promotion are sent out as an addendum to the memo: The conference call generates questions, and Safeguard associates also receive many questions via email. The team that created the mold policy reviews all questions and writes out answers. This FAQ addendum is then published to answer the specific questions asked by the contractor network. As an example, there is a common misconception between a stain-blocker (useful for water stains and graffiti) and a fungicidal paint that includes a stain-blocker. This issue and the brands available were directly addressed in the addendum.

One month after the initial launch, find champions or subject matter experts: Safeguard calls on these experts on the change to write a case study showing impact, and then it hosts another call. The field services company did this in a slightly different manner for mold, instead utilizing the quality-control personnel throughout the United States to partner with contractors and share practices on assessment, bids, and treatment methods.

Hard audit stop in operations for the change: Every order completed by contractors is subjected to multiple audit processes completed by the field services company. Typically, in the first few weeks of a change, there is a learning curve, and contractors are given reminders and additional resources to adjust to the new policy. In doing so, potential issues can be identified up front and mitigated accordingly.

For mold, there is the potential issue of contractors taking photo documentation of sources that were not the source of moisture poorly defined at the start. Field services companies can, in the beginning, provide an additional order to take the proper photos. However, after the initial phase, work orders are not accepted until the proper photos are provided to prove the absence of moisture penetration.

Have a backend top-down-audit-style review and enforcement of change: Safeguard’s quality-assurance team performs many backend audits to line up, in sequence, multiple (50 or more) of the same order for an individual vendor. Its other groups typically are looking at singleton events, which may cause a trend to be missed. For mold assessment, Safeguard looked at many orders where mold and sources were either identified or were documented as not causing an issue. This feedback was provided to the company’s contractors, and it goes over the specific opportunities for better performance.

Three to five months after the initial change, have an internal after-action review: Following the policy change and implementation of the change-management process, it is important for field services companies to hold an internal action review. The goal of these meetings is to determine what needs to improve, what was done well and can be repeated, and finally, if any clarifications or program changes should be made.

For mold, it may be discovered that the number of surfaces with mold varied greatly from home to home and that the expected maximum number of walls with mold occasionally exceeded the previously established maximum. This identified trend can aid in making the policy and work orders encompass a greater number of surfaces with the potential for contracting mold issues.

Constant change and innovations in technology have forced businesses to embrace the discipline of change management and focus on how people and teams are affected by an organizational transition. Dr. Kotter’s eight-step process for managing change can be personalized by field services companies, as Safeguard has, to address the continuous changes the servicing industry faces every day.

Source: DS News

Additional Resource:

Changing With the Times [pdf]

Building the Best Business Ecosystem

Posted on by Safeguard

Editorial
April 28, 2017

Integrated technologies are the key to effective field services.

Business ecosystems originated in the early 1990s as a strategic planning concept that describes a network of organizations – suppliers, distributors, customers, competitors, government agencies, etc. – involved in the distribution of a product or service. Each business in the “ecosystem” affects and is affected by the others, creating a constantly evolving relationship in which each business must adapt to survive.

According to Wikipedia, James T. Moore, the pioneer of business ecology, defines it as “an economic community supported by a foundation of interacting organizations and individuals – the organisms of the business world. The economic community produces goods and services of value to customers, who are themselves members of the ecosystem. The member organisms also include suppliers, lead producers, competitors and other stakeholders. Over time, they co-evolve their capabilities and roles and tend to align themselves with the directions set by one or more central companies. Those companies holding leadership roles may change over time, but the function of an ecosystem leader is valued by the community because it enables members to move toward shared visions to align their investments and to find mutually supportive roles.”

The mortgage servicing industry’s business ecosystem includes investors, mortgage servicers, field services companies and their contractor networks. These entities all must interact effectively and efficiently to ensure properties are preserved properly and neighborhoods are free of blight. To do so effectively, mortgage field services companies require their internal technology systems and those of their mortgage servicing clients and contractor networks to operate like a business ecosystem. Analytics, system integration and automation all play important roles in developing the most successful technological business ecosystem.

Data analytics has become a key success factor for servicers as they design compliance, risk mitigation and cost control strategies. Mortgage field services companies hold millions of points of data in their systems that can be beneficial in recognizing trends, such as how properties are moving through the convey process, which areas of the country are performing well in property preservation, and compliance or complaint issues in specific municipalities, to name a few. Field services companies are able to capture this data to proactively solve servicers’ problems. But this is only effective if the data is accurate and filtered through a controlled process. Field services companies can ensure the quality of the data by integrating their internal systems with the other entities in their ecosystem – specifically, their mortgage servicing clients.

In a typical workflow scenario, field services companies have their own internal set of systems – one for employees, one for clients and one for vendors. Each has to sign into its designated system to view property work orders and receive results. But integrating field services systems with client systems can reduce the time frame from order placement to final billing invoice and can provide more accurate results. This can be a near-real-time environment for “traditional” property assessments, rather than a batch file of results in a spreadsheet that needs to be reviewed by an employee.

The integrated system workflow begins when a work order is sent from a mortgage servicing client to a field services company. That order can be immediately assigned to an inspector or contractor in the field. That contractor completes the work and can feed results directly from the field on a mobile device to the back office for a quality control check. If something is identified as missing or inaccurate, the contractor can receive confirmation through his or her device and make adjustments or updates on-site.

Once the property assessment is considered accurate and is completed thoroughly, the finalized data is sent to the field services company. In a “traditional” work order scenario, one without any exceptions or discrepancies identified by the automated, integrated system, the information can be sent immediately to the mortgage servicing client, along with an invoice. System integration is key to this process and has reduced the time frame from order entry to completion from days to hours, or even sooner, in a traditional property assessment scenario.

Internally, field services companies set up business rules within the system to help streamline order assignments and identify exceptions or non-traditional work orders. These rules are based on service-level agreements with mortgage servicing clients or previously identified risks in property preservation. If an exception or discrepancy is identified, those order results are placed in a queue to be reviewed by a field services employee.

The integrated system helps field services companies focus more on exceptions by highlighting them in the workflow process. It streamlines the process for “traditional” orders to add more emphasis on exceptions. No longer do employees have to review all orders for errors or issues. Special attention is drawn to the exceptions through the automated workflow process developed into the system.

Automation is the most important element in an integrated business ecosystem. It ensures accuracy and quality of results by automatically evaluating all results, line by line. The business rules programmed into the system from order entry to billing make automation possible. They also allow the field servicers to set specific exceptions that need validation from an internal quality control associate. Examples include all four sides of the property being free of debris, a change in occupancy status or electricity being off when a sump pump is present. For the automation to be effective, the integrated systems must be able to handle real-time changes or updates for all business rules. The industry is continuously evolving, and regulations and legislation change often. The system must be able to adapt just as quickly and be easily configurable, even able to schedule changes in advance.

Mortgage servicing clients benefit from near-real-time information exchanges with field services employees and contractors, reduced time frames, and more accurate results when their systems are integrated with those of their field services partners. They can experience up to three times more efficiency operationally by integrating their systems that can be tailored to their individual portfolio needs.

Results are delivered more timely, and automation ensures a higher level of quality. The system integration does more to highlight exceptions rather than having to sort through all order data. Additionally, defined business rules are spelled out in one place. An added benefit for mortgage servicers is the ability to identify their own processing issues through the integration. They can build their own business rules to aid in identifying exceptions and streamlining traditional work orders. Auditing and billing are also completed more accurately, with the risk of error significantly decreased.

An important aspect of the mortgage servicing industry business ecosystem is designed to provide effective property preservation services to defaulted and vacant properties across the country. The idea is to protect servicers’ assets while eliminating blight in communities.

As the industry continues to change and evolve, field services companies have to be proactive in handling challenges and innovative in developing more streamlined processes. Technology is always at the forefront of innovation. From mobile devices changing the face of field services to integrating internal systems with the other entities in the ecosystem, mortgage servicing’s field services partners continue to identify ways to increase efficiency and quality in the property results they provide.

A fully automated and integrated workflow system helps build the best business ecosystem.

George Mehok is chief information officer for Safeguard Properties. He can be reached at george.mehok@s.safeguardproperties.com.

Source: Servicing Management (Building the Best Business Ecosystem [pdf])

Breaking Down Housing: The 2017 Industry Outlook

Posted on by Safeguard

Editorial
December 30, 2016

The future of property preservation in the mortgage servicing industry is bright as preservation companies, servicers, and investors collaborate to enhance preservation efforts to continue to reduce blight in communities across the country. The need for this partnership and aligning guidelines and best practices is stronger than ever to manage increasing oversight and legislation. The industry has come together to implement new standards of preservation and develop a system of checks and balances through technological innovation.

One of the main goals of property preservation is to ensure that neighborhoods are not overcome by blighted abandoned and vacant properties, in addition to protecting the properties themselves. Because those properties that are abandoned early in default can deteriorate over the course of the long foreclosure process, investors and servicers have recognized the need for extended preservation efforts for pre-sale properties that mirror those in REO (real-estate owned).

One example of this is the recent announcement from Fannie Mae at the 2016 National Property Preservation Conference on November 3 that it now requires clear-boarding securing products over plywood window coverings for its pre-sale properties. Prior to this announcement, Fannie Mae only required clear-boarding for those properties post-sale. It is nearly impossible to know the difference between a property pre- or post-sale based on appearance; therefore, it is imperative that all vacant and abandoned properties are maintained to the REO standard and not stand out as a target for vandalism and crime.

Additionally, technology–specifically mobile offerings–has made property preservation work more efficient and reliable over the past few years. There have been several major advances in the mobile platform to enhance location validation, and to avoid costly mistakes, and guided or “smart” scripts for contractors to follow in the field to assure a comprehensive reporting of a property’s condition is provided. The goal is to create a real-time two-way conversation between property preservation companies and their contractors utilizing the latest advances in geo-location technology, GPS, and smart scripting. Smart scripting is no longer a back-office function for property preservation contractors in the field. They now are able to capture the property condition in real-time on-site and communicate it back to the preservation company within minutes.

Through Safeguard’s own beta testing, we have learned that video technology also is going to be the future for documenting property condition and “telling the story of a property,” and we also appreciate that the video app and corresponding business process to review the results must be carefully designed for simplicity and speed. The result for servicers is going to be a game-changer in terms of quality and the ability to effectively communicate property condition.

Source: DS News (Breaking Down Housing: The 2017 Industry Outlook [pdf])

Fitting the Pieces Together

Posted on by Safeguard

Editorial
November 11, 2016

How to Ensure Success in Third-Party Vendor Recruitment

Named one of the greatest video games of all time by several sources, Tetris has captivated video gamers since the early 1980s with its simplistic and addictive gameplay. Players are challenged to maneuver geometric shapes composed of four square blocks, called “tetriminos,” by moving each one sideways or rotating it by 90 degree units to create a horizontal line of 10 tetriminos without gaps. Once that is accomplished, the line disappears and the blocks above fall closer to the bottom of the playing screen. After clearing a predetermined number of lines, a new level is entered and the tetriminos begin to fall at a more rapid pace. If the stack reaches the top of the playing screen, the game is over.

Although there have been many variations of the game over the years, the basic concept has remained the same. The key to conquering Tetris was to carefully place your pieces in the right order always looking ahead to the next piece to fall while also keeping an eye on the game board. Imagining Tetris’s gameplay, a direct parallel can be drawn between the game and managing a third-party vendor network in the mortgage field services industry. Companies need to recruit the right vendors to ensure they “fit” the requirements and compliance standards for the job. Like placing tetriminos in the game of Tetris, the third-party vendors not only need to be the right fit, but it is also the duty of the field services company to properly prepare them for the field and provide continuous resources to ensure they are successful.

UTILIZING THE LATEST RECRUITING TECHNIQUES
At the height of the foreclosure crisis, new boots on the ground companies (or third-party vendors) performing mortgage field services work exploded everywhere because it was easy to get into the business and make a profit quickly. As the industry recovers from the housing crisis, volume decreases and compliance requirements increase, many of those initial companies are leaving to find other work or to return to their former industries. Finding new qualified vendors can be difficult and traditional methods such as newspaper, word of mouth, and job boards have become less effective. Mortgage field services companies must utilize new methods of attracting new vendors to the industry –beyond the traditional approaches.

One of the best new methods for recruiting qualified third-party vendors is through social media. According to statistics on Facebook’s newsroom page, there are 1.71 billion active monthly users as of June 30, 2016. Of those users, about 66 percent or 1.13 billion log in daily. Other social media outlets such as LinkedIn, YouTube, Twitter, and Instagram also have large followings and provide a digital outlet for companies to market to job seekers. Creating a social media presence is not difficult but it does require attention and consistent content to attract followers. Content should be interactive, relevant, and compelling to entice the appropriate audience. To keep the content fresh, post a variety of industry articles, upcoming events, or pictures from past events. Gaining followers to a company’s page helps get the message out to a broader audience and could result in more leads. To quickly increase the number of followers to a page, most social media outlets provide the option of inexpensive paid advertisements that can reach thousands of potential leads in only a short period of time.

Social media outlets offer tools that allow digital marketers to target very specific demographics to ensure that any message is delivered to the correct audience and advertising dollars are maximized. These tools also provide reporting that will assist in determining if the appropriate audience is being targeted and how they are reacting to the message. A well-organized recruiting campaign can generate plenty of leads, but is only valuable if those leads can meet industry compliance standards and satisfy the needs of clients. A rigorous onboarding process is key to identifying the best recruits.

ONBOARDING BEST PRACTICES
During the onboarding process, a potential third-party vendor should move from a lead to qualified vendor status only if the basic standards are met. Mortgage field services companies that contract with vendors must carefully determine for themselves what those standards should be based on their client and investor requirements. At a minimum, a qualified vendor should present themselves as a viable resource by providing an Employer Identification Number (EIN), photo ID, a valid background check for the principal, and proof of insurance.

Requirements may vary not only by client or investor but also by state. For example, some states may require a vendor to have workers compensation insurance or a general contractor’s license to operate. Those states also may require that mortgage field services companies verify the required credentials before assigning work orders. Companies should consider developing a standard onboarding process that includes the use of a checklist to ensure that all of the required documents have been collected before starting a vendor in the field.

Documentation collected during the onboarding process and throughout the tenure of the vendor should be kept up-to-date and easily accessible by utilizing a centralized document retention system that can track expiration dates and provide compliance reporting. Many document retention systems offer features such automated email reminders to vendors approaching expiration dates on required documents and email form collection that reduces the amount of internal resources needed to track compliance. Well-written processes and consistent policies surrounding the onboarding process help instill a confidence in the client that the vendors working in the field are qualified and well vetted.

PREPPING THIRD-PARTY VENDORS FOR THE FIELD
Providing content rich resources to new third-party vendors during and beyond the onboarding process is essential to protecting and preserving vacant properties and delivering great service to clients. Prior to assigning work to new vendors, it is vital that they are prepared for the field by providing them with resources that clearly define the expectations of the clients and investors that will be serviced. The vendors’ field crews and office staff must understand the scope of work needed to complete and report work thoroughly. Overlooking this very important step in the onboarding process places the vendor at significant risk of not properly reporting damages, using allowables incorrectly, making multiple trips to the property, and missing important client due dates. These mistakes could lead to consequences for that vendor that could discourage continued growth within the industry. Industry standard and investor requirement instructional videos, field checklists, work flow diagrams, and aids support process compliance of new vendors. Build resources that are flexible and will allow for amendments as the scope of work, rules of engagement, and reporting requirements fluctuate.

To ensure that new and experienced vendors are well-versed in the most recent client and investor guidelines, companies should plan to provide resource materials throughout the lifespan of the relationship. Consider investing in a Resource Management System (RMS) to assist with facilitating and tracking the use of compliance resources. RMS systems automate the compliance process and are excellent for providing analytics, flexibility for the users; mobile delivery of content and some systems offer authoring tools to help with content creation. The RMS system can be utilized from the onboarding phase of a new vendor though the entire lifecycle. Many systems will have the ability to create additional users for vendors’ subcontractors who also can access compliance resources and track their usage. Some systems allow the administrator to push out new compliance resources or updates to registered users while providing version controls that guarantee only the most updated content is viewable to users. In addition to using an RMS system, utilizing e-mail communications and push notifications on mobile devices to inform the supply chain of critical updates to field processes and rules of engagement is key to ensuring the success of third-party vendors. Industry best practices or other helpful information can be funneled through the company’s social media sites, videos, or newsletters.

Conferences and seminars or webinars also provide a channel for communication about guideline changes, field technology improvements, and best practices. In addition, conferences give the vendor network an opportunity to interact and share ideas with each other that will improve their businesses and provide feedback to the service companies. Allowing the boots on the ground to share issues from the field may feel uncomfortable at first but can provide a service company with priceless information that will lead to providing a higher level of service to clients.

Technology is a key resource to directing vendors to completing tasks and collecting essential data about a property. Mortgage field services is a fast-paced industry and the right mobile applications can facilitate speedy results from the field directly to clients. According to the Pew Research Center, in 2015 two-thirds of Americans were smartphone users, which means that a majority of vendors are already using their smartphones and mobile applications on a daily basis. There are a number of different applications that are built specifically for the mortgage field services industry and can be customized to accommodate specific requirements or integration to other systems. Third-party vendors utilizing these applications in the field can turn results such as property condition, necessary bids, and supporting photos back to our clients quickly and efficiently. Vendors will enjoy the benefits of requiring less overhead to complete work orders, speed to invoice, and increased work load capacity. Other benefits for the vendors using these applications also may include management of crews in the field, work order routing, and push notifications.

Resource materials and technology unaccompanied with face-to-face communications will likely not be successful. In- field communication is a practical tool that can be used to link client expectations to a real-life application. One effective method to link all the pieces together is for the mortgage field services provider to have a representative walk through the work order instructions of the first order, visit the property alongside the vendor, and then sit with the office staff during the process of reporting the details, providing bids, and the uploading of supporting photos. This helps the new vendor understand how all the pieces fit together and also will allow the field representative to make initial assessment of the capabilities of the new vendor.

Building an effective vendor network is a continuous process of evaluating current vendors and determining where gaps exist. Once they are identified is when the real work begins. Much like the popular video game Tetris, pieces of the puzzle are always falling into the industry’s “game board”. It takes innovation to continue building a network of elite vendors that ultimately provides clients and investors with world class customer service.

Source: DS News (Fitting the Pieces Together [pdf])

Additional Resource:
DS News (Fitting the Pieces web version)