Quality Assurance – A Coordinated Approach to Risk Management in the Default Industry

Published in Servicing Management, February 2007

By Robert Klein

Quality Assurance can be defined as a planned and systematic pattern of actions necessary to provide adequate confidence that a product or service optimally fulfills customers’ expectations. As the Default Services industry has matured, we have seen a diligent focus on the completeness and comprehensiveness of quality assurance processes and procedures.? Compliance with investor guidelines has been the main driver of these quality initiatives however the industry has made great strides in utilizing quality control techniques to safeguard their client interests.? Increasingly, we have seen a collaborative approach to quality processes and procedures as field servicer’s, loan servicer’s, and investors (HUD, VA, FNMA, and Freddie Mac) have coordinated their approaches to ensure consistent quality of efforts.?

This spirit of cooperation was never more evident than at the Third Annual Property Preservation Conference held in Washington D.C. in November 2006.?? The Conference theme, “It’s About Time!”? highlighted the renewed partnerships within the industry as the attendees focused on long term goals and opportunities in streamlining the conveyance process, thus saving investors, servicers, and M&M contractor’s time and money.? This collaboration led to proposed resolutions and the establishment of focus groups to cooperatively work with the investors on reducing the inefficiencies in the current processes and improving the quality of work efforts.

Field Service companies are typically the first line of defense for the default service industries quality assurance efforts.? The primary goal is to assure that all contractors working with Field Service companies are thoroughly educated about and compliant with the industry and client requirements, and that their quality of work is consistent and sound.? Contractors are the eyes and ears of the Field Service companies.? Therefore, it is imperative that contractors deploy quality assurance techniques to ensure that work is performed competently, comprehensively, and proper supporting documentation is available.? From a contractor standpoint, quality assurance efforts include:

  • Field quality efforts include maintaining adequate equipment (ladders, air compressors, generators, etc.) to accurately and comprehensively complete the duties they are contracted to perform.
  • Use of digital cameras to provide photo documentation of the before, during, and after status of the work performed.
  • Utilization of office quality assurance efforts to ensure work order updates are timely and thorough and are adequately supported by documentation
  • Increased utilization of GPS and handheld inspection tools to ensure that not only are their employees physically visiting the property,? but are comprehensively completing and gathering the proper inspection data

Field Service companies conduct comprehensive quality assurance efforts as well. In addition to investor guidelines,? Field Service companies must also deploy quality assurance techniques to ensure they are meeting client and service level agreement requirements.? Quality Assurance efforts common to experienced field service companies include, but are not limited to:

  • Comprehensive vendor recruiting and training policies and procedures designed to ensure that recruitment is properly managed and resultant work products are consistent and in accordance with client requirements
  • Increasing use of technology allowing for process “scripting” that provides a roadmap for the contractor in the field to gather sufficient and complete evidential matter including photo documentation
  • The use of Contractor Report Cards and follow up procedures to ensure remediation of quality deficiencies
  • Comprehensive review procedures designed to ensure the adequacy and reasonableness of submitted bids
  • Comprehensive in house industry training to ensure that the in house personnel are properly trained and have access to the latest investor guidelines
  • Completion of random quality control inspections.? These inspections are typically performed after the inspector has completed their inspection and are deigned to determine whether or not the inspection was a true representation of the physical condition of the property at the time the inspection took place.
  • Assignment of “phantom” inspections to ensure that field inspectors are actually visiting properties and reporting accurate information.
  • The completion of interior inspections to ensure early detection of issues that if not detected and mitigated, could lead to a material loss to the value of the property.?
  • Critical path timelines and exception reporting established and consistently monitored to ensure timely completion of activities
  • Internal quality control audits designed to ensure that adequate photo documentation is available to evidence the work performed and an audit trail is maintained that evidences all work performed
  • Use of non-performance and demand letter issues to identify quality deficiencies and implement timely corrective action to prevent future occurrence
  • Pre Conveyance inspections designed to document issues at the time of conveyance in order to ensure the minimization of reconveyances.

Loan servicers have also implemented quality assurance measures designed to assure compliance with investors and the mortgagee’s own origination or servicing requirements.? These activities are designed to protect the mortgagee and investors from unacceptable risk, guard against errors, omissions and fraud, and assure swift and appropriate corrective action is implemented.? In this regard, the servicers have implemented quality assurance activities such as:

  • Utilization of Vendor Report Cards based on a representative sample of work orders performed designed to quality review work activities.
  • The assignment of High Risk Field Officers to work proactively with field service vendors and municipalities to ensure compliance and timely remediation of code issues
  • The increasing use of Service Level Agreements (SLA’s) that provide for financial disincentives for breakdowns in quality service
  • Utilization of automated invoicing applications to properly ensure that claims for insurance benefits are accurately prepared, properly calculated, fully supported, and submitted in a timely manner on a loan level detail

Investors have also renewed their focus on quality assurance and have proactively worked with servicers and field service companies in a collaborative manner.? At the Property Preservation Conference in November 2006, HUD identified their “top ten” ways to save time and improve efficiencies.? As an illustration of their focus on quality assurance, these included:

  • A recommendation that the industry take advantage of voluntary pre conveyance property inspections to minimize reconveyance risk
  • Ensure that quality efforts include the submission of a timely HUD-27011 form, and that all non surchargeable damage is properly documented
  • Their representation that “It’s all about Quality Control” when providing a comprehensive mortgagee/servicer audit trail.? HUD commented that servicers must perform periodic quality control audits to ensure that preservation and protection requirements are consistently met.

The Veterans Administration also announced strategies to improve efficiencies and quality at the Conference.? VA stated that they are now taking actions to address the servicers’ concerns of consolidation of cost schedules, streamlining and automation of claim payments, making information available online, instituting incentive plans for servicers, and implementing post-claim audits. Fannie Mae and Freddie Mac have also stepped up their quality assurance activities in accordance with the new industry focus. Both agencies have recently created a central office and email address for processing P&P requests nationwide.? These central offices track all bid requests by type and amount, making the reporting and auditing of data more efficient. Additionally, Fannie Mae has developed a servicing guide intended to assist the servicer to make quality decisions on their behalf.

In summary, the Default Industry has made tremendous strides in improving the quality of their work effort and has been working collaboratively to coordinate efforts.? A comprehensive quality assurance plan and process means cost savings to loan servicers, field service companies and ultimately the investors.? It should be apparent that if you cannot measure the quality of your efforts, you cannot improve it.? Industry quality assurance efforts need to focus on continuous business process improvement in an ongoing effort to enhance our products, services and processes.? However, these efforts cannot be undertaken in a vacuum and the industry must continue to collaborate on quality measures if we are to be successful.? The establishment of solid Quality Assurance plans will reinforce the investors confidence in loan servicing and result in renewed cooperation for all involved in the Industry.

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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.