Safeguard Properties

Next Generation Automated Workflow Systems

Posted on by Safeguard

Editorial
September 30, 2016

Balance between Operational Performance and Service Quality:
The mortgage field services industry faced a monumental challenge when the most recent recession impacted millions of Americans and every community in the U.S. Mortgage lenders, also known as servicers, hire property preservation firms to inspect and maintain those properties on their behalf during the delinquency process, which can take months, even years, in some areas of the country.

Field service companies like Safeguard Properties, the largest national property preservation company in the U.S., inspects and maintains millions of residential properties across the country utilizing a national network of thousands of inspectors and maintenance contractors.

Those inspectors and contractors receive work and report their findings back to Safeguard by following a script of questions, while utilizing a mobile device and a field service mobile app. Corresponding photos are required to paint a clear picture of the property for Safeguard and its mortgage servicing clients. Those scripts and photos result in millions of data points for Safeguard to manage by importing it from inspectors and contractors and exporting it to servicing clients. How does Safeguard, and other field services companies, manage the continuous flow of information– from the point a work order originates from the clients, to deploying inspectors or contractors to complete the work, processing and quality assuring the results, and reporting them back to the clients?

For field service companies like Safeguard, that manage millions of transactions flowing in and out of their systems, the key to success is to ensure work is routed efficiently, thus minimizing idol time throughout the end-to-end business process. This is crucial because field service companies are measured based on time to completion of an order, in addition to the quality of work performed at a property.

The results of work reported back to the company from the field are systematically evaluated. Pre-defined business rules are then applied to route orders to the appropriate operations team. Routing of orders into “queues” enables effective management of work based on priority, client, employee skill set and availability. Advanced queuing is essential in modern workflow systems. Rather than pushing work to individual employees who may not be available, queues enable groups of qualified and authorized employees to pull work.

Another key driver to successful workflow in today’s field service industry is data quality. Business processes and rules can be defined to effectively allocate work; however, if the data that the rules rely upon is suspect, the entire system will be compromised. Therefore, data quality controls must be built into the field workers’ mobile apps to the extent that the information collected will initiate the appropriate workflow step based on the situation on the ground.

Business rules are built into the software as the workflow engine makes decisions based on client defined guidelines, which are specific to each client and property type. The automated workflow technology enables the company to prioritize work to meet service level agreements. Service levels are influenced by the effective systematic routing of orders to the field worker based on ZIP code, capacity, skill set, training and credentialing.

Internally, the workflow system is aware of services through a role-based definition or business rules. This means that employees are slotted into roles correlating to their abilities and authorization levels. Each work item is assigned to a group or queue–only allowing employees in specific roles to work in specific queues. It removes manual decision-making and enforces security controls, which contributes to compliance for the company and its clients.

Additionally, the workflow system must be aware of the state of the employee–if he or she is in the office, in a meeting, on break or on vacation–in order to make appropriate staffing and allocation decisions based on the volume of work. That information is used to measure the productivity of the work routed versus the people available to do the work.

For example: An employee is working in the office in the morning but has to leave for a personal appointment in the afternoon. A manual process would utilize a spreadsheet of the work order volume for the day that gets distributed in the morning and would not account for the employee who had to leave. The work orders he or she was assigned for the day would not get completed in a timely manner. However, utilizing a modern workflow system, the other employees in the “queue”, who are qualified to perform the work, would be automatically assigned.

The software also can add an effective operational control by preventing employees from choosing or cherry-picking work that is easy to do. This ensures that all work gets done based on its priority as determined by the client or operations manager. The system can identify when a work item is complete because it must validate all actions are done properly before giving an employee the next order in the queue. This feature of the workflow system can have a dramatic impact on quality.

Visibility is another key feature in an effective automated workflow system. Operations and clients can know, at any moment, the status of work, either at the individual order level or aggregated for a subset of work order types. Effective workflow software has to provide visibility at company, client, worker and work order-type levels in order to identify opportunities to improve efficiencies.

The most effective workflow system is a sophisticated set of business rules that allows for dynamic routing of work based on client priorities and operational workforce design. End-to-end integration from order creation to the mobile field app and back into the operational units is the key for driving compliance, productivity and quality. Ultimately, automated workflow enables field service providers, such as Safeguard, to meet its commitments to the communities and clients that they serve.

Source: CIO Review (Next Generation Automated Workflow Systems [pdf])

Moving Out Of The Stone Age

Posted on by Safeguard

Editorial
October 3, 2016

Utilizing technology to keep employees in compliance.

A stereotypical business office scene often depicts filing cabinets overflowing with papers, stacks of documents and files piled on desks in a sea of cubicles that seem to go on for miles, fax machines churning out endless reams of paper, computers buzzing, and employees scribbling notes while answering a stream of phone calls. In some industries, these images hit very close to home. In fact, it was less than a decade ago when the mortgage field services industry embraced new technologies and subsequently went paperless – well, almost.

Like many businesses or industries, there is one segment that can still be stuck in an avalanche of paper – support departments, or specifically, the human resources (HR) department. The first impression these businesses make when hiring new employees – often millennial applicants who can be considered techie experts – is that these departments are stuck in the Stone Age as they juggle a stack of documents on their first day of work. Like many companies, operations, or the heart of the organization, are the first to receive the latest and greatest in technology, and often, the support departments are left to utilize out-of-date systems.

As technology evolves, companies invest a significant amount of money upgrading operational systems and implementing this new technology. In doing so, they have learned of the impact technology can have on an organization. Through technology, companies have been able to automate certain processes and improve workflow, among many other benefits. To aid in bringing that department out of the dark ages, it is imperative that companies implement an electronic filing system because the benefits companies are experiencing in operations can be effective for their HR departments, as well. This includes improving organization by streamlining processes, engaging the company’s information security team and ensuring compliance with client guidelines, in addition to guaranteeing that clients, too, are in compliance with regulatory guidelines and local, state and federal legislation.

Organization improved

Onboarding new employees or even maintaining files for existing associates requires housing a lot of documents and an incredible amount of organizational skills. There is an abundance of paperwork that needs to be completed when onboarding a new associate. This can become overwhelming from a tracking perspective. Often, the data needed from one form to another is duplicative and becomes time-consuming to complete. If a simple application on your smartphone can streamline processes, why can’t support departments do the same?

The way the system works is once the offer letter for a new employee has been signed, an electronic system enables companies to send links to a new associate. This allows him or her to complete the documentation prior to his or her arrival so the first day can be spent hitting the ground running – interacting with new teammates, training for the new position and learning about the industry – rather than filling out forms. The system also can be configured to send push notifications to the applicant when documents are not submitted. This saves time for both the applicant or the new employee and the recruiting associate. It also frees up other HR associates to dedicate time to developing new employees and other employee relations initiatives.

With the right electronic filing system, the sky is the limit. The most effective tool utilizes a robust workflow system. Not only can it streamline internal HR files – originating with the onboarding process – but it can also implement workflows for other HR-related processes.

An electronic filing system can be used to create a link that generates a workflow when placing an associate on any type of corrective counseling. This allows the HR associate to be actively involved, ensure designated follow-up with an associate occurs and maintain consistency across the board. Additionally, analytics are available on the types of corrective action that are transpiring within the organization. Based on this information, companies can determine if there is a policy that needs revising or clarification – in the past, this would have been done off of anecdotal information, but now, it is supported by facts.

In large organizations, the number of associates that have intermittent Family and Medical Leave Act benefits can create a tracking nightmare, especially if the tracking is completed manually in-house. Utilizing the electronic system to initiate requests, track the necessary paperwork and generate reminders on key dates has ensured compliance with the federal regulations around this type of leave. Record retention and data separation requirements are also critical to implementation, making a company’s information technology (IT) security team a crucial partner in selecting, implementing and maintaining an electronic filing system.

IT security’s role

Although it seems simple in concept, involvement from the company’s IT security team when moving to an electronic filing system is critical in ensuring it has the proper security protocols in place. The only benefit of the old paper system described above was that the file room was locked and secured, and only those with keys could gain access. The IT security team will be able to aid in figuratively “locking” personnel information – ensuring that all of the private and confidential data is secure and cannot be breached. The team needs to be involved in the system’s integration, in addition to confirming it is operating without any issues.

Clients benefit the most

Although all of these benefits described above are good for each company or organization utilizing them, the most important element of the system is the increased quality and compliance it creates for clients.

In the old paper system, when a client needed to perform a compliance audit or test, because companies are typically held to the same hiring standards that they practice, the company’s HR team would have to manually pull all of the personnel files that were randomly selected and cross their fingers and hope that something was not misfiled or missing due to human error. Even if regular internal audits were performed, the company was only verifying the records in its samples.

With an electronic filing in place, companies can run queries on a predetermined schedule for all document types to ensure that there is nothing missing. Realizing that the query is only as good as the initial data load, a detailed audit on those records that are critical to our operation is necessary prior to uploading the information. This gives the company the confidence in knowing that all of the information is in place and easy to access the next time a client performs a compliance audit or test. It can ensure that all background checks, required personnel files and other important paperwork are on file and accessible – solidifying that it is compliant with client and regulatory requirements.

Installing an electronic filing system in the HR department frees up associates who will spend less time tracking down documents and more time focusing on adding value to the lines of business they support. It helps them shift their focus to developing training initiatives that ensure quality results from employees while staying ahead of clients’ needs. The implementation of this initiative has also given access to employee files and records to all HR associates, streamlining employee needs and requests.

HR managers will no longer lose sleep over compliance issues and can remain confident that they are keeping clients in compliance, as these rules and controls were built up front. Now their biggest concern is what they are going to do with all of the empty filing cabinets.

Jennifer Anspach is the assistant vice president of human capital for Safeguard Properties, the largest mortgage field services company in the U.S. She can be reached at jennifer.anspach@s.safeguardproperties.com.

Source: Servicing Management (Moving Out Of The Stone Age [pdf])

Reaping a Recovery

Posted on by Safeguard

Editorial
July 29, 2016

The U.S. Department of Housing and Urban Development’s release of Mortgagee Letter 2016-02 this year marked an important step in bridging the gap between investor requirements and mortgage field services best practices. It provided one standard of property preservation across the country, addressing issues like the need for additional allowables, conveyance timeframes and mold remediation, just to name a few. HUD’s Mortgagee Letter 2016-02 also updated guidelines focusing on the importance of the hazard insurance recovery process and the role the hazard insurance recovery vendor plays in this process. It requires mortgage servicers to pursue insurance recovery and to make repairs with hazard claim settlements. To comply, all lenders and mortgage servicers need to ensure they have a qualified mortgage field services provider with a dedicated staff that handles the hazard insurance recovery process to maximize recovery and reduce losses.

The mortgage field services partner plays an important role in the hazard recovery process. They are the eyes and ears of the mortgage servicer and the hazard recovery vendor. Additionally, damages are discovered when the mortgage field services provider is completing inspection and preservation services. This discovery triggers the hazard insurance recovery process.

IMPORTANCE OF IDENTIFYING AND CATEGORIZING DAMAGE
When the initial inspection or preservation services are completed and damages are identified, it is important that these results contain the necessary documentation so the mortgage servicer, or its hazard recovery vendor, can make a determination on whether or not to file a hazard insurance claim. The documentation should include the following information:

Type of peril – Damages must be classified correctly. For example, broken pipes can be from theft or vandalism, freeze damage or mortgagor neglect or wear and tear. How the damage is reported can affect whether or not a mortgage servicer or their hazard provider will initiate a claim. It also may affect how the hazard insurance company views the claim and whether or not coverage is provided under the policy.

Description of the damage with an estimated cost to repair – Mortgage servicers need to know what is damaged, are the items missing or damaged, where the damage is located and an estimated cost to repair. Missing or damaged fixtures that are cosmetic in nature with a low estimated cost to repair may not result in a claim being initiated. For example, missing door knobs on the interior door or light fixtures can be low cost and considered a cosmetic issue, which will not justify a claim being initiated. Items considered essential to the home, like hot water tanks, furnace, plumbing systems, toilets and air conditioning condensing units have a higher cost and typically would justify initiating a claim. Sufficient details must be provided so the mortgage servicer or its hazard vendor makes an appropriate decision on whether to initiate a claim.

Date of discovery – The date the damage condition is discovered needs to be timely and accurately reported. This can significantly affect what policy was in force at the time of the loss. Inaccurate information can affect the amount of out-of-pocket costs the mortgage servicer may incur (deductible) or the timely resolution of the claim (if you file with the wrong carrier, you may have to refile). If the claim is not submitted in a timely manner, coverage can be denied.

Photos – Detailed photos that support the damage condition being reported are essential. These photos are key information the mortgage servicer or its hazard vendor need to verify the extent and cause of the damage. Photos memorialize the damages so if another event occurs there is documentation of the condition in support of the claim that was initiated. It also can significantly help in expediting the settlement of the claim and, in some cases, the hazard insurance company may issue settlement specifically based on the photos of the damage.

SCOPE VERIFICATION
Once the claim has been concluded, the mortgage servicer needs its mortgage field services provider to confirm the scope and pricing issued by the insurance company accurately reflects the damages. It is important to engage a mortgage field services provider that is knowledgeable and has a skilled network of vendors that understand how the hazard insurance companies issue settlements and the documents that reflect what has been covered. The insurance carrier will typically issue two sets of documents — the Explanation of Benefits (EOB) and a scope of work that is an itemized estimate of the work. The EOB outlines the coverage provided and breaks down the settlement. It will detail if there are conditions that were not covered and if there is recoverable depreciation that can be claimed after repairs have been completed. The scope of work will provide a detailed estimate of what repairs the insurance company has estimated need to be completed to address the damages and the allowable costs.

The mortgage field services provider will need to evaluate the EOB and the scope of work from the insurance company and engage a qualified vendor to verify the accuracy of the settlement that was issued by the hazard insurance company. If the settlement is found to be deficient in pricing or scope of work to be completed, the mortgage field services provider needs to be able to prepare a package of information that the mortgage servicer or their hazard recovery vendor can present to the hazard insurance company for consideration.

This should include:

  • An itemized estimate that clearly outlines what work was not covered in the scope or work provided by the hazard insurance company or that is not priced properly. The estimate should not duplicate items that are covered in the hazard insurance company’s scope of work and only include items that were missed by the insurance adjuster or not priced properly.
  • Photos of the items that were not covered in the scope of work. These photos should clearly support the claim that the items are missing or damaged.
  • If local code requires additional work or upgrades providing documentation from the local authority or the actual wording from the building code needs to be provided along with any other documentation supporting the claim.

COMPLETING INSURANCE REPAIRS
With HUD’s requirement to seek insurance recovery and complete repairs with the funds recovered, it is important that mortgage servicers have engaged a mortgage field services provider that has a network of vendors that can complete the repairs. Work must be completed in a timely manner and in accordance with the scope of work that was issued. If the work is not done correctly the mortgage servicer may face the following issues:

  • Delay in completing the work may result in the mortgage servicer being unable to claim the recoverable depreciation.
  • Incomplete repairs may result in the insurance carrier only issuing only a partial settlement for the recoverable depreciation.
  • Incomplete work can result in HUD issuing a reconveyance.

The mortgage field services provider needs to have a network of vendors that are knowledgeable and trained to handle repairs based on insurance settlements. A dedicated team with a quality control process that ensures all work has been completed in accordance with the scope of work will eliminate loss of recoverable depreciation funds and minimize reconveyances.

While HUD’s Mortgagee Letter 2016- 02 took great strides to improve property maintenance issues, hazard insurance recovery still remains a delicate process. Only skilled, knowledgeable mortgage field services providers with vendor networks trained to understand the process will prevent losses, improve conveyance timelines and increase financial recoveries. Those providers who have deep claims expertise are imperative for maximizing hazard insurance recovery and ensuring damages are properly mitigated at the property.

Source: DS News (Reaping a Recovery [pdf])

Managing Litigation Inside and Out

Posted on by Safeguard

Editorial
August 4, 2016

How an in-house team of lawyers can benefit your company

The word “litigation” conjures up the image of courtroom battles — polished lawyers in smart suits with expandable briefcases going head-to-head. While the actual battle can, and generally must, be assigned to outside counsel, you should never discount the need to staff litigation with in-house lawyers who work behind the scenes on the less dazzling but absolutely critical aspects of litigation. Without expert in-house counsel, important details can be overlooked, escalating costs and possibly jeopardizing case outcomes. If your company’s litigation docket is significant, and the topics below seem like Greek to you, then consider adding an in-house litigation team to the budget.

INSURANCE
While outside lawyers battle in court, the in-house lawyers are often battling the insurance company for coverage. In-house lawyers are best positioned to pursue coverage simply because of their knowledge of the case facts and applicable insurance policies, history of insurance coverage, and, quite frankly, the fiduciary responsibility to mitigate costs where possible and fight weak coverage opinions with often indecipherable reservation of rights clauses. No company should assume outside counsel will undertake this responsibility.

Similarly, when coverage is afforded, it is critical that in-house lawyers assure that competent panel counsel is assigned to the case, be vocal when inadequate counsel is assigned, and assure that outside panel counsel is keeping you informed and remembering that you, not the insurance company, are the client. Perhaps the most important role for in-house counsel in these situations is intervening at the settlement juncture to make sure that panel counsel is considering the best interests of the company, which may not always align with those of the insurance company, particularly when ugly words like “class action” and “punitive damages” are being bandied about.

PRIVILEGED INFORMATION
Managing internal communications and preventing employees from destroying privilege, which can happen simply by including individuals outside the company on communications that are privileged, is one of the most critical aspects of litigation management. Most employees have no clue how to identify and protect privileged information. In-house counsel acts as the gatekeeper and protector of such sensitive information, the improper disclosure of which, either at the time of the communication or by forwarding a communication at a later date, can single-handedly destroy an otherwise winnable case.

LEGAL HOLDS
If you are relying solely on your outside counsel to communicate to your employees regarding legal holds, you may not be serving your company well. Legal holds are tricky – in part because drafting a good legal hold letter is dependent on intricate knowledge of the company. In-house counsel is best suited to select the relevant employees to be subject to the hold – because being either over-broad or under-broad creates unwanted risk.

Additionally, in-house counsel is your best bet for drafting a sufficient litigation hold letter that your employees can actually understand and appreciate. Getting your IT department on board with every litigation hold is critical, and no one is better suited to align that aspect than in-house staff.

EMPLOYEE EXPERTS AND TESTIMONY
In many corporate cases, the company’s employees will be deposed and provide testimony. Electing who can and should provide that testimony for a company requires knowledge best held by in-house counsel. Testimony makes and breaks cases and selecting and preparing employees for the task requires inside knowledge.

Keep in mind, your employee witnesses have other full-time duties, and determining who constitutes the best deponents, and rotating them appropriately, is based case by case on the facts and generally best managed in-house. Similarly, while lawyers are the legal experts, the business folks are . . . well . . . the business experts, and clearly best suited to review and verify complicated discovery responses.

In-house lawyers have great feel for which operational staff can best review and verify responses. In many complex cases, multiple business lines are involved, further necessitating an insider to quarterback the full legal defense or offense.

MANAGING CLIENTS
Unfortunately, and particularly in the mortgage servicing space, you and your client may both be targeted in litigation, and your positions are not always aligned and free of conflict. Even when your client is not involved, the client may want regular updates on your litigation docket, despite your need to keep certain information privileged, to satisfy regulators enforcing client oversight of third-party providers. Add in client indemnity requests and all of these issues can create a tangled web between you and your client.

Managing your client and your client’s outside counsel can be sticky when there is an ongoing and successful business relationship between you. Your in-house counsel often acts as the mediator that keeps that relationship healthy, while also protecting the company’s best interest in the ongoing litigation — something outside counsel simply is not as well-positioned to balance for you.

SETTLEMENTS
Approximately 95% of all lawsuits settle before trial commences, but determining when to settle and under what terms requires a critical and strategic weighing of the pros and cons, beyond economic cost/benefit analysis.

Knowing when to fight and when to cut losses often requires detailed and intricate knowledge of business operations and overall company risk, along with an expert knowledge of the litigation process in general.

The adage of being penny-wise and pound-foolish can apply to a myriad of litigation, and it is critical that in-house counsel not only analyzes and appreciates the risk and benefits associated with each settlement offer, but also communicates and educates senior management in the decision-making process.

LITIGATION BUDGETING
If you want an accurate budget, you must include litigation. If your litigation docket is significant and spans multiple venues then likely so is the number of outside firms you are retaining to handle your cases. The only constant among them is your in-house litigation staff, the only counsel who can best project costs and cost timing on an annual basis and level-set management’s expectations.

MANAGING OUTSIDE COUNSEL
Even when you hand-select your own outside counsel, managing that relationship is critical and can be tedious. Extensive effort must be made by in-house counsel to ensure that outside counsel understands the business and the company’s objectives and risks — both case-specific and big picture.

Never assume outside counsel can draft pleadings without close tutelage and review by in-house counsel. Additionally, the task of managing outside counsel’s fees, as touchy as that can be, is critical. Many in-house lawyers began their careers in law firms and can appropriately review legal invoices and billing summaries and have direct and professional conversations with outside counsel to prevent runaway attorney’s fees.

PRE-LITIGATION CLAIMS
If your company is positioned to receive pre-litigation claims then you have opportunity to avoid costly litigation when claims with merit can be reasonably settled. Use in-house counsel to support the claims resolution process to evaluate both the likelihood that a claim will proceed to litigation if not settled and the likely success of such litigation.

In-house counsel can assist with evaluating whether settlement is an appealing option and crafting appropriate release and settlement agreements in cases where settlement is recommended.

THE FACTS
Your best cases are those with the best facts. Your in-house litigation team, particularly those with close working relationships with operational staff, best merge the business operational knowledge with the legal defense or offense, expertly managing a case from start to finish – inside and out.

Source: HousingWire (Managing litigation inside and out [pdf)

Declining REO Inventory

Posted on by Safeguard

Editorial
August 30, 2016

Until the recent housing crisis in the U.S., most people did not know the property preservation and mortgage field services industry existed. Perhaps many still do not understand all of the work that goes into preserving a property that has gone into default, been abandoned, or been reclaimed by the bank or financial institution holding the mortgage. “Real estate owned,” or “REO,” also is a term that was not commonly known to the public at that time that may be more recognizable today.

An REO property is one that is owned by the servicer, lender or, at times, investor. This happens after the home has gone into foreclosure. Generally, these properties are handled by an asset manager that contracts with a mortgage field services company to preserve and prepare the property for sale. The process of safeguarding, cleaning, repairing and marketing foreclosed assets is typically referred to as REO management.

With new pressure points the housing industry faces today following the crisis, mortgage field services companies need to continue to provide excellent service to the mortgage servicing industry. They need to ensure national standards are met regarding property maintenance and eliminate neighborhood blight so that their mortgage servicing clients can properly market and sell REO properties in their portfolios within a reasonable period of time.

Rapidly shrinking volume
According to the Federal Housing Finance Agency’s (FHFA) Foreclosure Prevention Report, as of the fourth quarter of 2015, the number of properties owned by Fannie Mae and Freddie Mac was a third of the peak during the crisis. With the continued decrease in the default rate, inventories will continue to decline. Overall, the government-sponsored enterprises report a total of approximately 72,000 assets in this status, according to the report. More recent reports from February put the default rate on mortgages at the lowest level since pre-2008 almost at “normal” levels of 1% of total loans.

Rapidly decreasing volumes put a spotlight on each individual home. In contrast to REO sales, there is a significant increase in the sales of owner-occupied properties. During the crisis, an REO property was one of the few that might actually get sold, whereas in this current market, REOs are competing against standard flow.

Alternative disposition
Another pressure point on the REO business is the alternative disposition of properties to investment or private equity. Rather than go the traditional REO route of taking the asset from foreclosure sale and selling it on the market, these entities are dispositioning the assets through third parties.

One of the risks of this approach is that an investor may or may not have the same quality standard for neighborhoods and communities. An investor is going to ensure it maximizes its return – and this could result in less consistent care for REO properties across areas. Although the ownership transfers, many lenders and investors still have sizable stakes in the remaining properties in a neighborhood. By relinquishing control to other parties, those entities lose the ability to ensure that a decision on an REO property doesn’t negatively impact another property where a loan is still being paid.

Neighborhood condition
The preceding sections define the market, rapidly declining volumes due to the improvement of the housing market and the utilization of alternative vehicles for loans. However, care for neighborhoods remains paramount. With the rebounding of the real estate market, it has become, in some ways, easier to sell properties. However, the overall competition level is stiff. The REO asset is competing with properties in the standard flow to a degree not seen in many years.

Debris and cleaning
A trend that the market has seen over the past several years is an increase in the amount of debris left in homes after foreclosure. Prior to the mortgage crisis, a typical property had approximately 10-15 cubic yards of debris consisting of yard waste, old clothes, uneaten food, etc. In recent years, the amount of debris in properties during the initial services has more than doubled. Much of this is attributable to the downsizing trend seen over the past decade. Individuals in foreclosure are moving from very large homes to smaller homes or apartments. They simply do not have room for all of the items accumulated.

Pricing appreciation
Additionally, the Multiple Listing Services (MLS) have reported that pricing of properties has returned to pre-crisis levels in most markets. This creates an opportunity to ensure that, in properly preparing and selling a property, the REO process does not create significant financial losses. During the post-mortgage-crisis period, the Federal Reserve Banks of Boston and Cleveland and the Federal Reserve Board published a study in 2010 called REO & Vacant Properties Strategies for Neighborhood Stabilization. The study concluded that REO property sales caused price depreciation in 31 of 34 states. As the volume of REO has declined, and overall prices have stabilized, this impact has been greatly reduced.

Delivering value
At times, an REO asset may be handled directly by a local broker. The asset manager may contract with brokers and set target pricing and returns. The broker is responsible for getting the property into marketable condition, often setting the price and completing all work with trades to complete necessary property repairs or upgrades. In this scenario, the entity holding the loan effectively outsources the control over property condition and rehab to many individuals who may have differing opinions and standards on how to best market a property.

Field service companies are different. By utilizing a national company to manage REO field services, asset managers gain significant procedural and activity benefits. The general processes as defined by the FHFA in its Report to Congress 2012 on REO include securing the property to avoid theft, vandalism and unauthorized use; maintaining and repairing to protect the value of the property, ensure marketability and minimize the negative impacts of foreclosures on communities; pricing appropriately; and selling in a reasonable period of time. Let’s examine how each of these core processes is managed effectively by a mortgage field services company.

Securing properties
National mortgage field services companies utilize vendors throughout the country to deliver services to homes that have completed foreclosure sale. They have broad reach and depth to ensure that as soon as a property can be serviced, it is. These entities have large training departments to provide their vendor networks with training through the use of videos, online job aids, mobile technology and regionalized training throughout the nation.

Typically, after a property transfers to REO status, the initial services required to secure the property are completed within five business days. Best practices for these activities go beyond just ensuring locks work, windows are secure and opportunities for unauthorized use are minimized.

Properties are cleaned, including the removal of all trash, to ensure they are safe to be marketed. Additional best practices for the asset managers include ensuring all exterior fixtures – such as lights, handrails, concrete steps and yards – are in marketable condition. Ultimately, the goal should be to make a property that is for sale due to the REO process indistinguishable from a standard MLS listing.

Maintaining and repairing properties
National field service companies have national standards. Best practices for this include a complete work order describing every activity that must be completed by individuals working at the property and enforcing this through the use of mobile technology to direct work and document results. By utilizing consistent work order standards, a property in a rural area gets the same treatment as a property in an urban or suburban area. Effectively, this means that the grass cut and landscaping work is consistent, repairs are done on time and blight to communities is minimized.

Additionally, the mortgage field services companies have extensive records and photo documentation of work completed so that evidence of the efforts to maintain the neighborhood can be shared with all interested and affected parties.

Pricing appropriately for quick sales
Mortgage field services companies may or may not participate in the price setting process. Where value is created is in ensuring that assets serviced by the field service vendors are properly cleaned, repaired and shined to deliver the best value possible.

Brokers are busy people. Their general expertise lies in evaluating, marketing and selling properties. By utilizing a national field service company, brokers are freed to manage the business of selling the property versus acting like a general contractor to source, complete and ensure quality of work done at the property. A national mortgage field services company can have up to thousands of vendors that it works with to get this done – a core competency of acting to collect, distribute and ensure quality across properties.

Future of REO properties
The REO business is here to stay. Although prior to 2008, many people were unaware of this part of the mortgage process, lenders and investors need a way to disposition properties when they return to their ownership. Alternative disposition, such as selling loans to private equity, has become more difficult, as the price to purchase such loans has increased, reducing returns for those investors.

Additionally, communities increasingly are holding not just the current property owners, but also the initial lenders and investors accountable and liable for proper maintenance and upkeep. This liability and the shrinking potential profit margins for buying large amounts of loans or properties will likely provide additional requirements for a servicer or investor to take homes through the REO process. Mortgage field services companies, specifically those with national standards and reach, are a key solution to ensure that an REO property is properly maintained and sold within a reasonable period of time.

Joe Iafigliola is the vice presi¬dent of vendor management for Safeguard Properties, a national mortgage field ser¬vices company. He can be reached at joe.iafigliola@ safeguardproperties.com.

Source: Servicing Management (Declining REO Inventory [pdf])

Virtualization, Mobilization, and Automation

Posted on by Safeguard

Editorial
April 5, 2016

How a mortgage field services provider transformed their IT operations to support growth, quality, and a rapidly changing business model. “Change is the Law of Life. And those who look only to the past or present are certain to miss the future.” – John F. Kennedy

“With constantly changing client requirements, a never ending quest to improve productivity through business process automation, and ever increasing information security requirements”

Safeguard Properties is the nation’s leading mortgage field services company providing an array of property inspections and maintenance services to the largest financial institutions in the U.S. These services are supported by a network of thousands of mobile field workers utilizing smartphones that are equipped with Safeguard’s own custom built apps. These apps enable Safeguard’s network to transmit millions of images and hundreds of gigabytes of data daily. This continuous stream of data is fed into Safeguard’s IT infrastructure, which is then connected to more than 100 mortgage banking clients. 

In 2012, as a result of a major acquisition and business growth, Safeguard embarked on a plan to revolutionize their IT infrastructure, operations and application portfolio to optimize the speed of delivery, quality, and technological advances. Safeguard’s strategy was to invest in technology that would solve the needs of the present, while also creating a foundation for the future of the mobile field services business.

As a mortgage field services provider, Safeguard saw a rapid organic growth in the services provided. This was a result of the housing crisis, mixed with increased regulatory requirements and compliance controls. Safeguard utilized this opportunity to revamp their aging IT infrastructure into a state-of-the-art, automated environment, located in multiple new data center facilities. This transformation leveraged virtualization to optimize server hardware resources and capital spend, while giving the organization high availability and system movement flexibility for support and maintenance activities. “With the latest virtualization technologies, we were able to increase performance, while better utilizing our physical server infrastructure, and lowering our total costs,” states Adam Piechocinski, Virtualization and DevOps Manager, Safeguard.

Automation is another cornerstone of the Safeguard IT business transformation. Using automation tools, tightly integrated with virtualization environments, Safeguard was able to build thousands of servers to support the new data center environments in just a few days. Safeguard’s traditional build, patch, and deploy cycle previously consumed a minimum of five days where work would get passed back and forth between server admins, data center ops, network, storage and application build teams. Taking a virtualization and automation-only approach to new server builds, allowed Safeguard to build complete application environments in minutes. This automation approach also saw a significant decrease in errors, inconsistent builds, and variance between server classifications, which additionally led to a decrease in outages for Safeguard’s user population.

The fusion of Safeguard’s automation and virtualization is also leveraged during patching cycles to patch and move systems throughout the data center environments, increasing availability and lowering patching windows from days to minutes. System agility in movements of applications with no user impact, has increased system availability to Safeguards clients, as well as to their network, all while giving Safeguard’s virtualization engineers the ability to service and patch hardware during the work day.

This automation and virtualization combination is also carried forward with software deployments. With constantly changing client requirements, a never ending quest to improve productivity through business process automation, and ever increasing information security requirements, Safeguard has been able to transform its deployment process for mobile and client applications from an eight hour deployment to a five minute process. As mobile development is completed and passes through multiple layers of quality checks, the software is packaged and auto-deployed to multiple data center environments simultaneously. This formerly labor intense and manual process is now completed with just a few mouse clicks. Safeguard’s mobile users are able to obtain patches, upgrades, and OS fixes for their Android and iOS applications much quicker and from multiple data centers around the country. This agility is the corner stone of Safeguard’s IT operations strategy. Leveraging automation, packaging, and DevOPs concepts, the company has been able to transform to a rapid response and near real-time change engine that supports many different application platforms. 

“To remain relevant and support the real-time business change, IT organizations must adopt an ‘automation first’ and virtualization mindset. We live in a ‘speed of thought’ society, where real-time agility to address issues, deploy systems and transform business processes are what separates growing businesses from businesses that react,” stated Scott Anderson, Assistant Vice President of Infrastructure, Safeguard.

As IT leaders, we cannot rely on monolithic servers, processes or workflows as a standard business practice anymore. With cost containment pressures, leaders must drive to virtualized, hybrid cloud-based environments which optimize their capital spend versus utilization. Automation of these environments must be drilled into the organizational DNA to speed processes, reduce human errors, increase system uptime and lower operational staffing needs. Business leaders of tomorrow understand business transformation and are leveraging all of today’s hardware and software tools to transform and optimize their organization into a change at the ‘speed of thought’ engine.

Source: CIO Review

Additional Resource:
Virtualization, Mobilization and Automation [pdf]

Setting the Tone

Posted on by Safeguard

Editorial
February 15, 2016

Field Services Companies Must Embrace the Coming Evolution in 2016

The mortgage servicing industry is at an interesting crossroads. Still faced with heightened regulations, the industry has shifted its focus to maintaining recovery from the recent housing crisis and evolving its processes to address these new regulations and guidelines. The servicing industry is building stronger relationships and uniform property requirements with investors and communities as another avenue to making the industry stable, including the new investor guidelines being released this year that include suggestions and best practices from servicing and property preservation industry officials.

With this juncture in the housing market, mortgage field services companies also find themselves on the edge of a new era. While much of the scrutiny these past few years has caused those companies to utilize additional time and resources to implement new processes, it also has helped them build better businesses. Through servicing client audits, field servicers were able to find flaws and correct issues. But many went beyond the requirements and also were able to highlight best practices and help make them industry standards.

National field services companies, like Safeguard Properties, have the opportunity in 2016 to set the tone for the evolving servicing industry through investments in new technologies, taking advantage of the collaboration between investors, servicers and communities by implementing preservation standards that mirror neighborhood benchmarks, and by utilizing new investor guidelines set to be released this year that will help them protect and preserve properties at a higher level.

INVESTING IN NEW TECHNOLOGY
Although video has been around for some time, it was not until it was made available on mobile devices that the field services industry really began examining its use in the field. Having the ability to report damages and receive bid approvals in almost real-time provides a more efficient way of mitigating issues and implementing additional quality controls. And although video will never replace photo documentation, it will be utilized to provide more detailed evidence of damages and issues at properties.

Our company has been testing video’s feasibility in the field for some time and will release applications for their inspector and contractor networks to utilize it day-to-day this year. The ultimate goal with video is for inspectors and contractors to be able to utilize it in real-time, like Facetime or Skype, while in the field.

In the meantime, the tests show that video and audio services can be recorded utilizing a mobile device and streamed back to the company. An employee receives an email that the video is ready for viewing and can call the inspector or contractor while still on-site at the property to discuss any issues or damages.

Since the video is streamed from the contractor’s device, storage is not necessary and will not create additional storage costs for them. That video can be sent along to clients for bid approvals and the work can be completed within the same day.

Geo-location technology will continue to serve as a quality control measure for determining the correct property location. Through the use of mobile devices and applications that collect meta data, including the longitude and latitude of where photos are taken, field services providers know if a contractor or inspector is at the correct property and can track that information for each visit.

Geo-location technologies also can be utilized to assign urgent or rush orders quickly to contractors working in the field. If activated on their mobile devices, location services can track contractors who then can be notified if an order pops up in their area. This is done so that not only the field servicers, but also its main vendor businesses, have a complete understanding where people are located for quality control and accuracy. In instances when an escalated or rush order needs completed, field services companies can rely on geo-location services to identify where contractors and their subs are located for more efficient deployment. Those closest to the property get the rush work order.

In addition to collecting longitude and latitude data, field services providers, through the use of mobile devices, also collect millions of points of other property information. For those national companies that service properties in all 50 states across the country, that data is rich with information that can be utilized to predict certain outcomes or behaviors in neighborhoods and communities across the country.

This is called predictive analytics, which aids in explaining a property’s story to investors by identifying neighborhood trends — like how many homes need windows boarded or what is the frequency of vandalism? Knowing this information in advance helps field servicers and their servicing clients determine if services need to be ramped up or altered in any way to fit the neighborhood’s needs.

In setting the tone for 2016, mobile services and devices will remain the king of efficient and accurate property preservation. It seems like a million years ago companies were cleaning off fax machines filled with work orders and receiving multiple delivery trucks a day filled with thousands of printed photos.

In just a few short years, mobile has opened up all of the possibilities outlined above in addition to providing additional layers of quality control. With the click of a few buttons, field services companies can ensure the right person –
one who has a completed background check and correct licensing on file – is at the right location and for the proper amount of time – time stamping shows the time and date captured for each photo submitted.

NEIGHBORHOOD STANDARD
Residents in neighborhoods across the country have been touched in some way by the foreclosure crisis. Median incomes, economics and location do not matter. Every community has felt its devastating effects. But those residents do not know the difference between vacant and abandoned properties in presale and those in REO, or post-sale, status. All they see is what can potentially be an eyesore or blight in their community. That’s why in 2016 it is encouraging to see more uniformity between city regulations and investor and client guidelines. It shows progress and promise that these entities also are raising the property preservation bar in all stages of default.

Because it has been proven that REO properties receive fewer municipal code violations, many servicers have begun the process of ensuring all properties are serviced to fit the neighborhood’s standards in both presale and REO. This includes completing additional services like repairing gutters and power washing the siding and driveway – issues that may have been potential municipal code violations in the past. It also includes mulching and weeding flowerbeds not just for an REO
property, but in pre-sale as well. As those chosen as the boots on the ground, it is the responsibility of field services companies to ensure these properties are reflecting that community standard to continue to eliminate blight across the country.

NEW INVESTOR GUIDELINES
Late last year, several investors released new inspector guidelines, outlining many of the best practices already implemented at field services companies. What is evident in these updated guidelines is that investors are seeking more information on their vacant and abandoned properties and those entering the properties to perform services.

The investors’ request for more information is not only evidence of the heightened scrutiny the mortgage servicing industry will continue to face in 2016, but also an encouraging move that shows an increased interest in protecting these properties. This longer list of oversight helps field services companies sharpen their quality controls as they aim to comply on behalf of their servicing clients.
 
The highly-anticipated U.S. Department of Housing and Urban Development (HUD) property preservation guidelines will be released this year. There is a lot of speculation surrounding this release, but the hope is that these guidelines mirror best practices, processes and quality controls already established by the field services industry. Again, there is a need for uniformity in things like vacancy definitions and compliance with local codes and ordinances without having to seek additional bids. These ideals will aid in improving conveyance performance by putting in place allowables for common city requirements and ordinances. It maximizes efficiency as approvals are received up-front to comply with ordinances and property issues then can be mitigated quickly.
 
These guidelines will make a huge impact on the industry in 2016, and it is predicted that they will not only help create more uniformity in property preservation but also a better endproduct for neighborhoods and communities across the country.

The future looks a little brighter for mortgage servicing and its field services partners. This “new normal” in the housing industry is settling in as all parties come to terms with embracing the changes and new regulations. Utilizing new technologies, preserving properties to neighborhood standards and embracing new investor guidelines will have positive impacts on the industry and those businesses that are willing to accept the evolution in 2016.

Source: DS News (Setting the Tone [pdf])

Buiding Better Relationships

Posted on by Safeguard

Editorial
November 23, 2015

Field services companies are using one-on-one tactics to help their vendors grow and succeed.

In business, the key to success is the ability to provide great customer service. Building a good rapport with customers or clients can launch a company ahead of its competition in no time, but that is not the only relationship that needs grooming. Establishing good connections with internal employees and third-party vendors can be equally, if not more important in some industries.

These relationships are critical in the mortgage field services industry. National companies rely heavily on their partnerships with third-party vendors who serve as the boots on the ground network in the field. They provide a first-hand look into properties across the country, allowing field services companies to relay accurate and timely property information to their mortgage servicing clients. These third party vendors, or inspectors and contractors, are the vital backbone of this industry. It is important for field services companies to maintain healthy relationships with that particular network.

There are many philosophies on building good relationships, with several themes emerging that can assist field services companies in building those partnerships. Just as important is how field services companies implement these philosophies into their day-to-day business strategies. Safeguard Properties, has developed several methods that establish a one-on-one connection between its third-party vendors and internal employees. It is similar to a “single point of contact” philosophy, but gives both parties incentives to succeed.

The idea behind this environment was to establish a best practice for the field services industry that focuses on those relationship building ideals and enhances accountability for its vendors’ successes.

In this type of system, vendors are assigned a vendor account manager as their primary one-on-one connection or single point of contact. That vendor account manager is responsible for the coordinated success and performance of that particular vendor company. Their achievements and failures go hand in hand with how they develop and grow together as partners. The more successful the vendor is, the more successful the vendor account manager.

DEVELOPING IDEAL CANDIDATES

In creating the vendor account manager system, care in hiring or promoting current employees to this position is key to success. These handpicked individuals need to possess a very special set of skills and have the right personality, in addition to a level of professionalism that is required.

Successful ideal candidates have generally shown to originate in or have strong backgrounds and experience in high-pressure sales, legal collections or supply chain management, to name a few. They need to be someone who is outgoing and friendly, but not afraid to correct poor performance or manage issues openly and directly. These individuals should be highly intelligent, detail-oriented, and analytical with the ability to identify drivers to isolate and remediate issues. These individuals possess a hunger to always be better and exhibit an excellent motivational and ambitious mentality to help others they interact and partner with to be better as well. They are competitive and driving toward success at all times.

Conflict resolution also is a highly developed skill for ideal candidates. The daily transactions are very similar to those experienced in an advanced collections environment or other high pressure situations. Focus and calculated efforts are often required to achieve a mutually beneficial and successful outcome, in which vendor account managers have to manage challenges for vendors trying to complete work properly and on-time. They must serve as the diffuser in any conflict that arises for the vendor and find resolution in an amicable way.

A hallmark of the vendor account manager program is the way employees are compensated, incentivizing success through additional financial rewards. The premium talent that the role requires calls for a pay scale that allows the company to attract the best and the brightest.

Competitive compensation is a vital key to better identifying and attracting the correct demographic and candidate pool for vendor account manager recruiting and prospecting in the field services industry. It motivates them to ensure their vendor networks are thriving. Financial bonuses should be given to the vendor account managers whose network is exceeding the standards set by the company and its clients.

Vendor account managers should be evaluated on their vendors’ performance in quality, on-time percentages, mobile usage, in-house quality control reviews, company set criteria, quality order reviews; reopen percentages, and commitment date percentages. This is factored into their own performance in communication with vendors, correcting poor performance, and relationship building to determine the vendor account manager’s incentive. Further, there is a review component where the vendors offer feedback on the vendor account manager’s performance and their relationship.

COMMUNICATION AND PERFORMANCE MANAGEMENT

In our company, each vendor account manager is geographically assigned on average 100 vendor companies covering over several states for one service line – REO maintenance, property preservation, seasonal work, or inspections. There is no set formula on how each vendor account manager establishes and maintains those business relationships, nor is there an exact number of vendors assigned that dictate success, but some have created best practices that help grow their networks.

Open, straight forward, and high frequency communication is critical in establishing, fostering, and maintaining a good business relationship between vendor account managers and vendors. This relationship is not only coordinated like a business partnership, but also as a joint endeavor. Conversations are ongoing and proactive. A major key in this communication is establishing the open environment for not only areas of evaluation or improvement, but also to strategically identify vendor growth, strengths, and successes. This involves dedicated communication between the vendor account manager and their vendors to work together to identify root causes of challenges to achieve their mutual goals.

A healthy vendor account manager and vendor relationship is not solely interaction from the vendor account manager or another employee at the field services company as a reaction to an issue or mistake. Vendor account managers are their partners within Safeguard and they have the vendors’ best interests in mind to enable the conversations to be more supportive, even if it is to discuss something negative.

Next to communication, performance management and review is a critical element in making this relationship work. Vendor account managers manage vendor performance by determining if the number of vendors in the market is sufficient, ensuring work is allocated properly, and identifying sources for additional coverage as needed. They need to have that intangible personal skill to be in tune with their network and consistently follow up on performance. So if there are urgent or high profile orders, they know who is capable of managing additional work, for example.

The vendor account manager works to grow, improve and follow a “Vendor of Choice” model. It’s a basic concept that helps ensure the vendors who exhibit high performance, quality, interaction, strategic operational tactics, and local coverage controls will receive work first as a priority over lesser successful companies. For those vendors that are not performing up to the standard, vendor account managers are diligent in knowing what training resources and education are available to assist vendors in their day-to-day work. They also are trained to walk them through systems and processes to ensure work is completed properly and with a thorough understanding of expectations.

As with all relationships, it takes hard work, patience, and a mutual appreciation for each other’s strengths and areas of opportunity. The relationship’s success or failure is determined by the willingness and dedication of both parties to provide each other the support to overcome challenges and work together to achieve their goals.

Relationships benefit from face-to-face interactions. It requires vendor account managers to make regularly scheduled trips to visit vendor offices and their crews in the field. Being in their backyards, and not just on the phone, gives the vendor account manager a first-hand look into their business and a way to identify opportunities they have for improvements, expansion and growth. The vendor also has the ability to share their best practices in the field that can potentially be shared with other vendor businesses in the vendor account manager’s network. This meeting helps the vendor account managers make a personal connection with the vendor, which can help them get better insight into how the vendor’s business operates.

Successful vendor account managers are invested in helping vendors grow their businesses by coaching and ensuring they have the opportunity to climb the service chain. For example, a top-performing vendor that does grass cuts or landscaping may be equipped to handle interior property cleaning. The vendor account manager will help guide them in that direction to expand their business offerings, not only for the benefit of Safeguard and the field services industry, but in ways that can help them expand into servicing other industries as part of the vendor’s intended growth plan.

Because national companies rely heavily on their partnerships with third-party vendors, building those relationships are critical in the mortgage field services industry, more so than other businesses. Tapping into philosophies on building good relationships and connecting with vendors one-on-one were the goals behind our company’s vendor account manager program. While communication and performance management are the most critical elements, using incentives, selecting the correct talent and relationship-building tactics have proven to be effective as on-time performance and quality have improved for Safeguard’s vendors.

The biggest positive this program has created is the improved relationships formed. The benefits are immeasurable and the company looks forward to continuing to help its boots on the ground network grow and succeed.

Jeremy Barrick is the director of open orders at Safeguard Properties, the largest mortgage field services company in the U.S. He can be reached at jeremy.barrick@s.safeguardproperties.com.

Source: DS News

Head in the Clouds

Posted on by Safeguard

Editorial
September 10, 2015

Field services providers embrace hybrid cloud infrastructure for scalability, automation, and cost containment

Change is difficult but often essential to survival.” —Les Brown

Cloud computing is the next big technological paradigm shift for organizations to stay competitive, remain profitable, and prosper in uncertain financial times. Technology has progressed from punch cards, to mainframes, to client-servers, to web-based approaches for importing, storing, processing, and producing data to drive business initiatives. With the continued evolution of processor capabilities, storage growth, and real-time information needs, organizations must transform their IT strategies if they are to remain relevant.

The 2014 report Data Growth, Business Opportunities, and the IT Imperatives conducted by IDC and EMC reveals that the volume of total data we, as a society, create is doubling in size every two years. By 2020, the global volume of data will represent 44 zettabytes, or 44 trillion gigabytes. To put that number in context, the volume of textual data in the Library of Congress represents 15 terabytes of space, or roughly 0.000000015 zettabytes. Field services organizations are seeing a rapid increase in storage consumption from the millions of pictures, videos, emails, and data coming into their environments from myriad sources. These organizations are charged with storing multiple copies of each piece of data on their storage arrays, replication arrays, network storage devices, and backup media. The consumption, storage, and management of this volume of data is forcing field service organizations to change their strategy for data management.

Field services IT departments must rapidly respond to changes in security, regulatory, compliance, and client needs within their IT infrastructure and IT applications. In addition, these IT environments also must be agile enough to rapidly scale their environments up and down to meet changes to transaction volumes—while controlling costs—to ensure the profitability of the business.

Cloud computing strategies provide the essential tools for IT organizations to gain scalability and agility within their organizations while meeting the cost control mandate.

Although the idea of cloud computing has been around for over a decade, it has been only recently that this process of transitioning workloads to cloud environments has experienced a significant spike in the business world. Many businesses are moving away from investing capital in data center environments and racks of physical servers toward co-located private cloud environments or pure public cloud-based infrastructures. These businesses are gaining greater agility, scalability, and availability of their systems and business processes. With the field services industry’s rapidly changing requirements and the need for secure data storage of millions of properties, these new technological approaches are critical for business success.

Cloud computing is generally categorized into three distinct approaches: public cloud, private cloud, and hybrid cloud. Because of increased scrutiny from regulators and the need to keep property information secure, while better controlling costs, the best way field services companies can serve their mortgage servicing clients is by adopting a hybrid cloud infrastructure strategy.

Making It Public

For several years, IT professionals and businesses have debated the best way to utilize cloud computing within their organization. Those in favor of the public cloud offerings cite the cost savings of predictable operating expenditures over variable capital expenditures. Public cloud advocates also enjoy the known cost structures for scaling their environments to address usage, speed, and increased data capacity needs.

Public cloud offerings tend to be less expensive and easier for businesses to rapidly implement, while avoiding the capital costs of purchasing and maintaining data centers and physical hardware. Public cloud infrastructures are billed on a consumption model, representing the end user client’s use of storage, central processing unit (CPU), memory, bandwidth, and level of redundancy.  As additional services or technical resources are consumed, monthly operating expenditures will increase.

Public cloud environments also provide great benefits to organizations beyond capital cost avoidance, which include automation, scalability, rapid deployment models, and decreasing staff needs. Public cloud clients are able to build systems and complete environments in minutes with the automation tools built into the public cloud offerings. Many public cloud clients also are building elasticity into their environments, allowing them to auto-provision and scale up to meet the demands of their users, then dynamically de-provision systems during lower utilization periods to further optimize operating costs. With the cloud provisioning and automation toolsets, public cloud clients require less IT administrative staff, lowering their staffing expenditures and shifting their existing staff toward more engineering focuses.

Because public cloud computing runs on shared hardware, consumed by many different clients, security concerns may be an issue for financial clients running their mission critical applications and storing their protected data in a shared public cloud environment. Other areas of concern with public cloud offerings include the accessibility of retrieving data or moving data between providers, linear growth in operating costs, and the auditability of public cloud environments.

Private Eyes
 
Many IT organizations are implementing private cloud environments, which leverage the public cloud technologies like virtualization, automation, and enhanced monitoring within their physical or co-located data center environments. IT organizations that prefer private cloud computing prefer the agility, automation, scalability, and redundancy of public cloud offerings, mixed with the management, security, and control frameworks built within their own data center environments.

The private cloud is developed and implemented to support a single organization—whether managed internally or by a third party—and hosted within internal data centers or co-located environments. Highly sensitive and confidential data can be stored securely in a private cloud offering, with the IT organization maintaining total control of the security and audit components. IT organizations also have greater flexibility and options for managing access to their environments in a private cloud offering.

Private clouds maintain higher costs than public cloud offerings due to the need for both capital and operating expenditures related to the maintenance and support of the data center environments, physical hardware, software, and the cloud framework tools. However, the increase in costs is offset by the total control an IT organization can maintain with relation to security, audit/compliance, technical capabilities, and data access.

Best of Both Worlds
 
A hybrid cloud combines both public and private cloud services that companies are leveraging into a comprehensive solution to solve business problems. While being separate entities, many organizations are combining public cloud services for scalability and agility in their infrastructures, while maintaining private cloud offerings for security and control of their protected data.

Fields services organizations will find that a hybrid cloud strategy will offer their organizations the greatest flexibility, while maintaining the tight security controls needed to meet audit and compliance requirements. Regulations and guidelines require that property data remain stored in a secure location with stringent access controls around that data. Using the hybrid strategy allows for the flexibility and cost savings involved in consuming public cloud resources with unrestricted data, while maintaining their critical systems and confidential data in the controlled private cloud environment. Several national field services companies, like Safeguard Properties, have begun utilizing the hybrid cloud system to leverage public cloud offerings for informational websites and research and development (R&D) projects, while maintaining all of restricted data within their tightly controlled private cloud environments.

Earlier this year, RightScale, a cloud automation vendor, released its 2015 “State of the Cloud Report,” which surveyed 930 IT professionals about cloud computing. It showed that hybrid cloud offerings remain the preferred strategy for businesses, with 82 percent of businesses reporting that they use a hybrid offering. This is up from 74 percent in 2014’s report.

The Sky’s the Limit
 
Field services providers must take a cautious approach to cloud computing. Many mortgage servicers have yet to fully embrace public cloud technology due to legitimate security and compliance concerns. However, field service providers can leverage a hybrid cloud strategy, keeping their sensitive data protected in their private environment, while leveraging public cloud offerings for development, test, and stage environments to lower capital costs and pay for the services they consume on an as-used basis. Field service providers also can leverage cloud service offerings for targeted applications like time and attendance, payroll, CRM, or Web hosting initiatives. Safeguard has implemented a comprehensive hybrid cloud strategy, integrating the company’s new state-of-the-art data center environments with private cloud technologies, while utilizing public cloud services for hosting of informational websites and strategic research and development projects not containing sensitive data. Using a hybrid cloud approach has helped Safeguard provide better services to its mortgage servicing clients through ensured and enhanced security, dynamic agility, and enhanced monitoring.

The hybrid cloud approach has allowed Safeguard to be more agile in reacting to issues or needs in a timely manner. Leveraging public cloud offerings for rapid R&D builds of solutions has allowed Safeguard’s IT department to rapidly prototype and deploy test solutions, without tying up infrastructure hardware and human resources. These solutions are vetted out in protected public cloud offerings, then brought back into Safeguard’s private cloud environment for deployment into the production infrastructures. In leveraging public cloud services, Safeguard has been able to lower its capital spend for development environments and developmental IT staffing support.

Safeguard’s newly implemented private cloud infrastructure has provided great efficiencies and agility to support the rapidly changing needs of the industry. System deployments have decreased from multiple days down to minutes, environmental patching has been reduced from weeks to several hours, and system failovers have decreased from hours to minutes.

This new level of agility has positioned Safeguard to better support and rapidly respond to dramatic fluctuations in transaction volumes. For example, during grass-cut season, Safeguard can dynamically increase system capacity to support increased transaction volumes, then scale back as transaction volumes decline in the fall.

Safeguard’s private cloud strategy, termed “Data Center 2.0,” has implemented redundancies at all tiers of its environment, across multiple geographically diverse data center environments, while removing single points of failure. This is done so the company’s clients are not affected and, in most cases, are not even aware if system issues arise. This cloud strategy also enhances Safeguard’s monitoring capabilities, as systems and transactions can be analyzed down to the packet level. This gives the company complete visibility into the health and performance of applications across all systems, networks, and end-user environments.

Despite questions, uncertainty, and lingering doubt from the mortgage servicing industry, a cloud computing strategy is a requirement for field services providers to maintain the agility to support rapidly changing requirements and support the exponential increase in data, while controlling IT costs within their organization.
 
SCOTT ANDERSON is the AVP of infrastructure services for Safeguard Properties, the largest field services company in the U.S.

Source: MReport

Preserving Neighborhoods

Posted on by Safeguard

Editorial
August 5, 2015

Protecting the quality of neighborhoods from foreclosure blight is the mutual goal of mortgage servicers and local governments. More collaboration – instead of more red tape – is the answer.

The recent economic crisis has prompted comprehensive discussion over the last several years as we try to make sense and put into perspective what caused our economy to falter. The mortgage industry, in particular, has been in a state of constant change since the crisis began.

As the mortgage industry continues to adjust to new and ever-changing regulatory forces, it becomes increasingly important for representatives from all facets of the industry to continue to partner and collaborate on best practices. That goes for all vendors that support the mortgage industry, including the field service industry.

With many industry indicators at or nearing pre-crisis levels, the housing market is definitely on the right track. However, Industry experts do not foresee full stabilization for several more years.

We see statistics on a monthly basis that provide insight into the current stock of vacant and abandoned properties, as well as those in real estate-owned (REO) status. Currently this housing stock remains above pre-crisis levels, and these homes — and the increasing pressure to maintain them in a way that satisfies the myriad local and municipal codes — have prompted conversations over the last several years around maintaining a home to “neighborhood-like” standards.

However, there has been no consistent definition as to what neighborhood-like standards are and what is required to adhere to those requirements.

The nature of the challenge
Loans serviced on behalf of the government-sponsored enterprises (GSEs), the Federal Housing Administration (FHA) and the Department of Veterans Affairs (VA) have guidelines, fee schedules, delegated authority and other options to assist the servicers in protecting and preserving properties.

The guidelines, however, do not include provisions to address all of the potential deficiencies that can result in local code violations. It is impossible for the guidelines to take into account all of these local requirements. Beyond that, the delegated authority to incur expenses to meet those local requirements has not been proffered to the servicing industry.

And yet, with the increase in oversight from government entities such as the Consumer Financial Protection Bureau (CFPB) and the Office of the Comptroller of the Currency (OCC), servicers are required to demonstrate their compliance with all local laws.

When a property goes into default and is vacated, servicers take over the maintenance of these properties to ensure they are secure, the asset is protected from deterioration and measures are taken to minimize the blight that is inherent when a property is unoccupied. However, because the servicers do not have title to the property until the foreclosure sale, there are limitations as to what actions they can take and/or what they should be responsible for.

The efforts made by mortgage servicers and the mortgage field services industry to maintain properties to neighborhood-like standards are sometimes in conflict with the guidelines set forth by investors. When you add in the matrix of regulations, legislation and oversight enacted at the national, state and municipal levels — which themselves lack uniformity and are many times at odds with federal guidelines — an unfortunate environment of misunderstanding and contention is created that overshadows the common goal of preserving and protecting properties.

As the number of vacant and abandoned properties remains elevated, property preservation will continue to play a vital role for the servicing industry. It’s a role that increasingly includes helping servicers balance investor property preservation guidelines with adhering to state and local codes that are sometimes outside the scope of those guidelines.

There is a growing need for open and honest dialogue about what now constitutes “neighborhood-like” conditions, changing community expectations and the need for expanding reimbursement for property preservation activities. And the dialogue needs to explore how we can all work together to find solutions that work for everyone.

Maintaining neighborhood standards
We can all agree that across this country, no two neighborhoods are exactly alike. We can also agree there is not a neighborhood that has not felt some impact from the housing crisis.

The mortgage field services industry has played an integral role in helping to maintain these neighborhoods and taking action to minimize neighborhood blight.

Once a property has been vacated and abandoned by the borrower, a property preservation company is dispatched by the servicer to secure the home, provide preventative measures such as winterization, maintain the lawn and inspect the property monthly to look for signs of damage or deterioration.

A growing number of local governments have been enhancing their code-compliance efforts, specifically focusing on the condition of pre-sale vacant and abandoned properties. One can certainly understand the desire of local governments to protect their communities from the ravages of the housing crisis. However, prompted by the extended foreclosure process and resulting long vacancy periods, these local efforts have put stress on traditional preservation activities.

Today property preservation is not just about securing a lock or boarding up a window. It is about preserving the appearance of neighborhoods and maintaining homes as good as the house next door.

Individual homeowners are primarily responsible for ensuring that they maintain their home in compliance with local code ordinances. However, when a home is abandoned and the homeowner becomes delinquent on his or her loan payments, the property is usually left to deteriorate and become subject to code violations.

Once these properties are in default, cities have struggled with ensuring that vacant properties are properly maintained. If these properties are not maintained, studies – such as the Federal Reserve Bank of Cleveland’s 2008 study, Spatial Analysis of the Impact of Vacant, Abandoned and Foreclosed Properties, – have shown that the larger communities begin to decay and these vacant properties can provide a safe haven for the criminal element.

The servicer’s role
When homes become vacant, the mortgage lender or loan servicer will then typically become the asset’s sole caretaker to protect the value of their collateral and meet the responsibilities and requirements included in the mortgage contract.

The vast majority of the servicers in this country truly care about the communities in which they serve. Billions of dollars are spent annually by the servicing industry to protect these homes and to ensure the communities are not blighted.

However, there has also been a material increase in “fly-by-night” purchasers who are more interested in flipping foreclosed homes for a quick profit, with no interest in maintaining them. Unfortunately these entities or individuals have tainted a predominately community-friendly servicing industry that wants to do what is necessary to combat blight.

The responsibility of the lender to protect a property’s collateral value continues until the property proceeds through the foreclosure sale. Depending on the state, the foreclosure process may take as little as two months in non-judicial foreclosure states to as long as four years or more in states with a judicial foreclosure process.

According to U.S. Foreclosure Market Report™, a March 2015 study from Irvine, California-based RealtyTrac, the top three states with the longest average days to complete a foreclosure (for foreclosures completed in the first quarter of 2015)were New York (1,475 days), New Jersey (1,115 days) and Hawaii (1,058 days). This same report found that nearly one in four homes in foreclosure at the end of January 2015 had been abandoned by the owner before being foreclosed on.

Many things can happen to a property during the lengthy pre-sale period prior to the foreclosure sale. And they can lead to costly repairs once the title has transferred to the servicer. Local code officers, city councils and neighbors have continued to raise the bar on the type and amount of preservation and maintenance work they expect to take place at a property.

For example, depending on the community, code-enforcement officials will be looking for such violations as peeling house paint, cracks in walkways and steps, swimming pools that aren’t secured to local code, and dying brown lawns.

Investors hold servicers responsible for keeping a property up to code, yet presently do not provide reimbursement for items outside of their respective preservation fee schedules, like replacing gutters, painting the exterior of the property or repairing fences. This puts the servicers at risk for heavy fines, penalties and tarnished reputations for failing to address issues that violate local code.

There is a growing need to look at increasing the allowable and reimbursable property preservation activities to enable servicers to meet the expectations of the diverse communities that make up their property portfolios.

New Developments
In the interim, field services companies need to remain flexible and willing to adjust their services, processes and procedures to help servicing clients remain in compliance with new and changing regulations.

For several years, Safeguard has tracked property registration ordinances through its online matrix. Those ordinances are tracked from proposal to either being enacted or rejected. To date, Florida has the highest number of property registration ordinances than any other state in the U.S. Massachusetts and Ohio have the highest number of bond issues – or jurisdictions that require a cash bond when the property is registered.

The challenge with these registrations is that they all differ and have unique guidelines so they must all be managed appropriately. They also require registration at varying levels of default. Some kick in at the first sign of delinquency while others do not require the property to be registered until it becomes vacant. In June 2014, Safeguard was tracking 1,708 property registration ordinances through its matrix. Since that date, 281 have been added, with 168 enacted and 17 proposed.

One recent shift by Safeguard has been to offer add-on services that can help servicers keep pace with the proliferation of local and municipal ordinances and maintain homes in neighborhood-like condition. Such services include mulching; weeding; cosmetic trimming of shrubs; replacing gutters; power-washing the exterior of the home, sidewalk and driveway, for example.

Collaborating to bridge the gap
The reality is that more than 5 million homes have been foreclosed on since 2008, and indicators are that number will continue to rise. The 2010 Home Affordable Modification Program (HAMP) has provided temporary relief to help financially struggling homeowners avoid foreclosure by modifying their loans to a level that is affordable. However, of the 1.4 million loans modified by HAMP, one-third have redefaulted, according to the Office of the Special Inspector General for the Troubled Asset Relief Program’s (SIGTARP) Quarterly Report to Congress dated April 29, 2015.

In addition, the more than 3 million home-equity lines of credit (HELOCs) secured between 2005 and 2008, at the height of the housing bubble, will begin to reset in 2015, putting further financial stress on at-risk homeowners.

Although municipalities have stepped up their enforcement and are taking a stronger posture in addressing code violations, it is important to recognize that municipalities and the mortgage industry are both working toward the same goal. The end goal for all involved is to protect properties, maintain their value and preserve the quality of communities and neighborhoods.

Conversations that bridge the gap between guidelines, policies, ordinances and simply doing what is right will help the industry succeed in protecting the condition and value of vacant and abandoned properties, uphold the value and integrity of surrounding properties and neighborhoods, and protect the most fragile communities from expanding blight.

As the eyes and ears of our clients, field services companies have the unique opportunity to share our industry knowledge and local experiences, and use them as an opportunity to start conversations around the deficiencies that are potentially impacting property values and neighborhood goodwill.

Safeguard has built relationships with government officials on state and national levels, but all relate back to those at the local jurisdictions. For example, the national associations include the National League of Cities (NLC) and American Association of Code Enforcement (AACE). Safeguard’s community initiatives department has visited all corners of the U.S. in hopes to reach those with a vested interest in learning best practices for managing blight.

It is in the industry’s best interest to come together and engage in dialogue with federal, state and local officials to share expectations and discuss solutions. Immense opportunity exists to effect real change by evaluating each other’s unique challenges in collaboration.

After all, we all are working toward the same goal: maintaining the integrity and value of properties and neighborhoods across the country.

Alan Jaffa is chief executive officer of Valley View, Ohio-based Safeguard Properties, the largest field services company in the United States. He can be reached at alan.jaffa@s.safeguardproperties.com.

Please click here to view Preserving Neighborhoods [pdf].