Preserving Neighborhoods

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@safeguardproperties.com.

Please click here to view Preserving Neighborhoods [pdf].

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CHIEF EXECUTIVE OFFICER

Alan Jaffa

Alan Jaffa is the chief executive officer for Safeguard, steering the company as the mortgage field services industry leader. He also serves on the board of advisors for SCG Partners, a middle-market private equity fund focused on diversifying and expanding Safeguard Properties’ business model into complimentary markets.

Alan joined Safeguard in 1995, learning the business from the ground up. He was promoted to chief operating officer in 2002, and was named CEO in May 2010. His hands-on experience has given him unique insights as a leader to innovate, improve and strengthen Safeguard’s processes to assure that the company adheres to the highest standards of quality and customer service.

Under Alan’s leadership, Safeguard has grown significantly with strategies that have included new and expanded services, technology investments that deliver higher quality and greater efficiency to clients, and strategic acquisitions. He takes a team approach to process improvement, involving staff at all levels of the organization to address issues, brainstorm solutions, and identify new and better ways to serve clients.

In 2008, Alan was recognized by Crain’s Cleveland Business in its annual “40-Under-40” profile of young leaders. He also was named a NEO Ernst & Young Entrepreneur of the Year® finalist in 2013.

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Chief Operating Officer

Michael Greenbaum

Michael Greenbaum is the chief operating officer for Safeguard. Mike has been instrumental in aligning operations to become more efficient, effective, and compliant with our ever-changing industry requirements. Mike has a proven track record of excellence, partnership and collaboration at Safeguard. Under Mike’s leadership, all operational departments of Safeguard have reviewed, updated and enhanced their business processes to maximize efficiency and improve quality control.

Mike joined Safeguard in July 2010 as vice president of REO and has continued to take on additional duties and responsibilities within the organization, including the role of vice president of operations in 2013 and then COO in 2015.

Mike built his business career in supply-chain management, operations, finance and marketing. He has held senior management and executive positions with Erico, a manufacturing company in Solon, Ohio; Accel, Inc., a packaging company in Lewis Center, Ohio; and McMaster-Carr, an industrial supply company in Aurora, Ohio.

Before entering the business world, Mike served in the U.S. Army, Ordinance Branch, and specialized in supply chain management. He is a distinguished graduate of West Point (U.S. Military Academy), where he majored in quantitative economics.

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CHEIF INFORMATION OFFICER

George Mehok

George Mehok is the chief information officer for Safeguard. He is responsible for all strategic technology decisions, new systems deployments and data center operations supporting a national network of more than 10,000 mobile workers.

George has more than 20 years of leadership experience dedicated to high-growth companies in the mobile telecommunications and financial services industries, spanning startups to global industry leaders.

George played a senior role in the formation of Verizon Wireless, leading the IT product development and strategic planning team. He led the integration planning for the Verizon merger including: GTE, Vodafone-AirTouch, Bell Atlantic Mobile and PrimeCo.

As chief information officer at Revol Wireless, a VC-backed CDMA wireless communications network operator, George’s team implemented an integrated technology infrastructure and award-winning business intelligence platform.

George holds a bachelor’s degree in political science and economics from Eastern Michigan University and an M.B.A. from The Ohio State University. He is a board member of Akron University’s School of Business Center for Information Technology, in addition to an advisory board member for OHTec.

In 2013, George won the Crain’s Cleveland Business CIO of the Year award for his team’s work in completing a major acquisition and technology transformation at Safeguard. In 2015, George’s team was recognized by InformationWeek’s annual Elite 100 ranking of the most innovative U.S.-based users of business technology. The mobile inspection technology developed at Safeguard was selected as InformationWeek’s “One of the top 20 ideas to steal in 2015”.

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General Counsel and Executive Vice President

Linda Erkkila, Esq.

Linda Erkkila is the general counsel and executive vice president for Safeguard, with oversight responsibilities for the legal, human resources, training, compliance and audit departments. Linda’s broad scope of oversight covers regulatory issues that impact Safeguard’s operations, pro-active risk mitigation, enterprise strategic planning, human capital and training initiatives, compliance and audit services, litigation and claims management, and counsel related to mergers, acquisition and joint ventures.

Linda’s oversight of the legal department along with multiple compliance and human capital focused departments assures that Safeguard’s strategic initiatives align with its resources, leverage opportunities across the company, and contemplate compliance mandates. Her practice spans almost 20 years, and Linda’s experience, both as outside and in-house counsel, covers a wide range of corporate matters, including regulatory disclosure, corporate governance compliance, risk assessment, executive compensation, litigation management, and merger and acquisition activity. Her experience at a former Fortune 500 financial institution during the subprime crisis helped develop Linda’s pro-active approach to change management during periods of heightened regulatory scrutiny.

Linda previously served as vice president and attorney for National City Corporation, as securities and corporate governance counsel for Agilysys Inc., and as an associate at Thompson Hine LLP. She earned her JD at Cleveland-Marshall College of Law. Linda holds a degree in economics from Miami University and an MBA. In 2017, Linda was named as both a “Woman of Influence” by HousingWire and as a “Leading Lady” by MReport.

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Chief Financial Officer

Joe Iafigliola

Joe Iafigliola is the Chief Financial Officer for Safeguard. Joe is responsible for oversight of the Control, Quality Assurance, Accounting and Information Security departments, and is a Managing Director of SCG Partners, a middle-market private equity fund focused on diversifying and expanding Safeguard Properties’ business model into complimentary markets.

Joe has been in a wide variety of roles in finance, supply chain management, information systems development, and sales and marketing. His career includes senior positions with McMaster-Carr Supply Company, Newell/Rubbermaid, and Procter and Gamble.

Joe has an MBA from The Weatherhead School of Management at Case Western Reserve University, is a Certified Management Accountant (CMA), and holds a bachelor’s degree from The Ohio State University’s Honors Accounting program.

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AVP, High Risk and Investor Compliance

Steve Meyer

Steve Meyer is the assistant vice president of high risk and investor compliance for Safeguard. In this role, Steve is responsible for managing our clients’ conveyance processes, Safeguard’s investor compliance team and developing our working relationships with cities and municipalities around the country. He also works directly with our clients in our many outreach efforts and he represents Safeguard at a number of industry conferences each year.

Steve joined Safeguard in 1998 as manager over the hazard claims team. He was instrumental in the development and creation of policies, procedures and operating protocol. Under Steve’s leadership, the department became one of the largest within Safeguard. In 2002, he assumed responsibility for the newly-formed high risk department, once again building its success. Steve was promoted to director over these two areas in 2007, and he was promoted to assistant vice president in 2012.

Prior to joining Safeguard, Steve spent 10 years within the insurance industry, holding a number of positions including multi-line property adjuster, branch claims supervisor, and multi-line and subrogation/litigation supervisor. Steve is a graduate of Grove City College.

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AVP, Operations

Jennifer Jozity

Jennifer Jozity is the assistant vice president of operations, overseeing inspections, REO and property preservation for Safeguard. Jen ensures quality work is performed in the field and internally, to meet and exceed our clients’ expectations. Jen has demonstrated the ability to deliver consistent results in order audit and order management.  She will build upon these strengths in order to deliver this level of excellence in both REO and property preservation operations.

Jen joined Safeguard in 1997 and was promoted to director of inspections operations in 2009 and assistant vice president of inspections operations in 2012.

She graduated from Cleveland State University with a degree in business.

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AVP, Finance

Jennifer Anspach

Jennifer Anspach is the assistant vice president of finance for Safeguard. She is responsible for the company’s national workforce of approximately 1,000 employees. She manages recruitment strategies, employee relations, training, personnel policies, retention, payroll and benefits programs. Additionally, Jennifer has oversight of the accounts receivable and loss functions formerly within the accounting department.

Jennifer joined the company in April 2009 as a manager of accounting and finance and a year later was promoted to director. She was named AVP of human capital in 2014. Prior to joining Safeguard, she held several management positions at OfficeMax and InkStop in both operations and finance.

Jennifer is a graduate of Youngstown State University. She was named a Crain’s Cleveland Business Archer Award finalist for HR Executive of the Year in 2017.

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AVP, Application Architecture

Rick Moran

Rick Moran is the assistant vice president of application architecture for Safeguard. Rick is responsible for evolving the Safeguard IT systems. He leads the design of Safeguard’s enterprise application architecture. This includes Safeguard’s real-time integration with other systems, vendors and clients; the future upgrade roadmap for systems; and standards designed to meet availability, security, performance and goals.

Rick has been with Safeguard since 2011. During that time, he has led the system upgrades necessary to support Safeguard’s growth. In addition, Rick’s team has designed and implemented several innovative systems.

Prior to joining Safeguard, Rick was director of enterprise architecture at Revol Wireless, a privately held CDMA Wireless provider in Ohio and Indiana, and operated his own consulting firm providing services to the manufacturing, telecommunications, and energy sectors.

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AVP, Technology Infrastructure and Cloud Services

Steve Machovina

Steve Machovina is the assistant vice president of technology infrastructure and cloud services for Safeguard. He is responsible for the overall management and design of Safeguard’s hybrid cloud infrastructure. He manages all technology engineering staff who support data centers, telecommunications, network, servers, storage, service monitoring, and disaster recovery.

Steve joined Safeguard in November 2013 as director of information technology operations.

Prior to joining Safeguard, Steve was vice president of information technology at Revol Wireless, a privately held wireless provider in Ohio and Indiana. He also held management positions with Northcoast PCS and Corecomm Communications, and spent nine years as a Coast Guard officer and pilot.

Steve holds a BBA in management information systems from Kent State University in Ohio and an MBA from Wayne State University in Michigan.

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AVP, Mobile and Analytics

Jason Heckman

Jason Heckman is the assistant vice president of mobile and analytics for Safeguard. He is responsible for both Safeguard’s mobile development and strategy as well as the company’s data warehousing and business intelligence. Jason oversees the design, development and release of all Safeguard’s internally developed mobile applications. He also oversees the development and delivery of operational and analytical data technologies throughout the organization.

Jason joined Safeguard as manager of mobile in 2012. During that time he led the development and integration of Safeguard’s mobile applications across the company’s vendor network to provide real-time data from the field. In 2014, he was promoted to director of mobile applications and named assistant vice president in 2017.

Prior to joining Safeguard, Jason was the director of application development and business intelligence for Revol Wireless, a privately held wireless provider in Ohio and Indiana.

Jason holds a bachelor’s degree in business management from Case Western Reserve University in Ohio.

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AVP, Business Development

Tim Rath

Tim Rath is the AVP of business development for Safeguard. He is responsible for developing innovative growth strategies for Safeguard and developing and overseeing potential partnerships, mergers and acquisitions.

Tim joined Safeguard in 2011 as project director and has filled numerous roles within Vendor Management, most recently serving as director of vendor management, a role he assumed in 2011.

Prior to Safeguard, Tim worked as director of supply chain at PartsSource Inc. in Aurora, Ohio, a provider of medical replacement parts, procurement solutions and healthcare supply chain management technology services. He also has held sales positions with Rexel, ComDoc, and Pier Associates, all based in Ohio.

Tim holds a degree in marketing and sales from The University of Akron in Akron, Ohio. He also earned his FAA Certified Commercial UAS (Drone) Pilot license in 2017.