Regulators Warn Banks Not to Flout $25B Foreclosure Deal

On September 12, National Mortgage News published an article titled Regulators Warn Banks Not to Flout $25B Foreclosure Deal.

Regulators Warn Banks Not to Flout $25B Foreclosure Deal

When the largest U.S. banks agreed to pay $25 billion last year to settle claims of abusive foreclosure practices, they promised to stop seizing homes from borrowers who had completed applications for mortgage help.

Now regulators say lenders may be flouting the spirit of the deal by repeatedly asking for additional paperwork from borrowers seeking loan modifications and then foreclosing while treating the applications as incomplete.

The Consumer Financial Protection Bureau and the court-appointed monitor of the 2012 foreclosure settlement are among those moving to tighten oversight of the process known as dual-tracking, when borrowers facing the loss of their homes are simultaneously negotiating changes in their loans. Mortgage servicers who violate the rules or the terms of the deal could face sanctions including fines of $1 million per infraction.

“It is an important outstanding issue of unfinished business,” Joseph A. Smith Jr., the monitor, said in an interview.

Smith, who is responsible for ensuring Bank of America Corp., JPMorgan Chase & Co., Wells Fargo & Co., Ally Financial Inc. and Citigroup Inc. live up to their promises, said he is preparing to start measuring how well banks are communicating with borrowers about loan-workout applications. That could determine whether the servicers or homeowners are at fault for incomplete files.

Separately, the consumer bureau this week plans to complete proposed changes to pending mortgage-servicing rules aimed at tightening restrictions on dual-tracking, according to a person briefed on its work. The rules, to take effect in January, would cover all lenders, including those who aren’t parties to the settlement such as Ocwen Financial Corp. and Nationstar Mortgage Holdings.

Richard Cordray, director of the consumer bureau, said in an interview that he has personally met with the heads of the top 25 mortgage servicers, banks and non-banks alike, “to tell them face to face that this is a major priority for the bureau and that it’s something they need to focus on.”

Other U.S. and state agencies also have vowed to pursue banks that violate the settlement terms. U.S. Housing and Urban Development secretary Shaun Donovan has said that authorities would fine banks or “haul them back into court” if they failed to improve treatment of borrowers. New York attorney general Eric Schneiderman said he is preparing to sue Bank of America and Wells Fargo for breaching the terms of the settlement.

Paul Leonard, a senior vice president at the Housing Policy Council, a group representing mortgage servicers, said complaints about dual-tracking partly reflect a “misunderstanding” of what the settlement requires.

“Some people think that if there is any contact from the servicer to the borrower that any part of the foreclosure process stops,” Leonard said in an interview. “That is not the case.”

Bank of America “is in compliance with all standards related to dual-tracking,” spokesman Rick Simon said in an emailed statement.

Even as foreclosures decline and the housing market turns around, nearly 2.9 million borrowers have missed at least three mortgage payments and remain in danger of losing their homes, according to data compiled by the housing department. Loan modifications, which reduce monthly payments, are meant to help delinquent borrowers become current again.

Lenders have completed nearly five million mortgage workouts since 2009, about 1.2 million of them through the Home Affordable Modification Program, in which the U.S. Treasury offers incentive payments to lenders for each loan modified for a delinquent borrower. The median HAMP workout reduced borrowers’ monthly mortgage payments by nearly 40%, or $547, according to Treasury data.

During the same time period, servicers repossessed about 3.7 million homes, according to data compiled by RealtyTrac Inc.

While no national data has been published that measures the scope of dual-tracking, housing lawyers and advocates said that they continue to see homeowners who were wronged in the workout process.

“We’re hearing complaints from customers of every major servicer,” said Gary Klein, a Massachusetts attorney whose clients have sued Bank of America for failing to modify their mortgages.

U.S. District Judge Rya Zobel in Boston last week denied the request of homeowners in 26 states, including Klein’s clients, to be considered for class-action status because their claims were not similar enough. Still, Zobel said that Bank of America had a “Kafkaesque bureaucracy” that determined which documents homeowners had to submit and said the borrowers’ claims “may well be meritorious.”

John Bartholomew, an attorney with the Atlanta Legal Aid Society, said an example of the pattern is how Citigroup dealt with one of his clients, Gwendolyn Green, a drugstore employee in Loganville, Ga.

Green said in an interview that she fell behind on her mortgage payments after her former husband’s truck-parts business went bankrupt and they divorced. She first applied to Citigroup for a loan modification in October 2012. On July 1, the bank notified her she’d have one. Then came the bad news: Her monthly payment would be reduced by only $1.01, to $984.49.

Even though she began making the payments under the program, Green said, Citigroup notified her it still plans to seize the ranch home, which has an assessed value of $115,000, on Oct. 2.

Green said Citigroup repeatedly demanded paperwork she had already faxed multiple times, notably a document confirming her sole ownership of the home. She said she kept records to prove it.

“They keep asking for the same things over and over and over again,” Green said. “They change people who handle the case, and each time a new person comes on, they ask for the same things.”

Citigroup spokesman Mark Rodgers declined to discuss Green’s case other than to say that the bank “correctly followed strict guidelines set forth by governmental agencies” when dealing with her loan modification.

The HAMP program, under which Green applied for help, also bars dual-tracking. Still, the HAMP rulebook “does not say that foreclosure sales cannot be scheduled and postponed,” Rodgers said.

“There is no universe where Citi is allowed to schedule homeowners like Ms. Green for three consecutive foreclosures after they’ve accepted and are current on a trial modification,” Bartholomew said.

Like the national settlement, the consumer bureau’s rules, which were first published in January, will bar foreclosure when a homeowner has submitted a complete application for a loan modification. The new language to be inserted this week could also bar foreclosure if a servicer has told a borrower that an application is complete and subsequently discovers that more documentation is required.

The agency also has been soliciting public feedback about whether it needs to be even more prescriptive in defining what constitutes a finished application so that isn’t left up to the banks. Commenters including Massachusetts Attorney General Martha Coakley responded that there should be a more uniform definition of when the paperwork is complete.

Cordray said the regulations will be “very specific” about the requirements.

“I would have been glad to be able to think that we could oversee the industry with looser rules, but I just don’t think we can,” Cordray said.

Katherine Porter, who monitors the mortgage settlement on behalf of California attorney general Kamala Harris, identified the lack of a concrete definition of a complete loan-assistance application as a “serious problem” in a June report.

Porter said she has received more than 3,300 complaints from homeowners that banks aren’t following the rules. The breakdowns usually involve communication failures between departments of the same bank or the incompatibility of computer systems containing different pieces of information about a loan file, she said in an interview.

The banks “do make calls. They do send letters,” Porter said. “And I think many of the consumers are really desperately trying to get their documents in. There’s a mismatch in the way that they’re communicating with each other.”

Porter said that if she had one wish, “I would wish for deep investment in better technology.”

Technology woes were at the root of Smith’s findings in a June report that monitored the settlement banks’ servicing practices. The report showed that Citigroup, Bank of America and Wells Fargo had failed to meet deadlines for notifying borrowers that their workout applications were incomplete.

“Areas in which our performance has temporarily fallen outside of the allowable thresholds did not result in inaccurate foreclosures or improper loan-modification denials, and corrective action plans for those areas are being submitted to the monitor and implemented,” Simon, the Bank of America spokesman, said.

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About Safeguard 
Safeguard Properties is the largest mortgage field services company in the U.S. Founded in 1990 by Robert Klein and based in Valley View, Ohio, the company inspects and maintains defaulted and foreclosed properties for mortgage servicers, lenders,  and other financial institutions. Safeguard employs approximately 1,700 people, in addition to a network of thousands of contractors nationally. Website:



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.


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.



Sean Reddington

Sean Reddington is the new Chief Information Officer for Safeguard Properties LLC. Sean has over 15+ years of experience in Information Services Management with a strong focus on Product and Application Management. Sean is responsible for Safeguard’s technological direction, including planning, implementation and maintaining all operational systems

Sean has a proven record of accomplishment for increasing operational efficiencies, improving customer service levels, and implementing and maintaining IT initiatives to support successful business processes.  He has provided the vision and dedicated leadership for key technologies for Fortune 100 companies, and nationally recognized consulting firms including enterprise system architecture, security, desktop and database management systems. Sean possesses strong functional and system knowledge of information security, systems and software, contracts management, budgeting, human resources and legal and related regulatory compliance.

Sean joined Safeguard Properties LLC from RenPSG Inc. which is a nationally leading Philintropic Software Platform in the Fintech space. He oversaw the organization’s technological direction including planning, implementing and maintaining the best practices that align with all corporate functions. He also provided day-to-day technology operations, enterprise security, information risk and vulnerability management, audit and compliance, security awareness and training.

Prior to RenPSG, Sean worked for DMI Consulting as a Client Success Director where he guided the delivery in a multibillion-dollar Fortune 500 enterprise client account. He was responsible for all project deliveries in terms of quality, budget and timeliness and led the team to coordinate development and definition of project scope and limitations. Sean also worked for KPMG Consulting in their Microsoft Practice and Technicolor’s Ebusiness Division where he had responsibility for application development, maintenance, and support.

Sean is a graduate of Rutgers University with a Bachelor of Arts and received his Masters in International Business from Central Michigan University. He was also a commissioned officer in the United States Air Force prior to his career in the business world.


General Counsel and Executive Vice President

Linda Erkkila, Esq.

Linda Erkkila is the general counsel and executive vice president for Safeguard and oversees the legal, human resources, training, and compliance departments. Linda’s responsibilities cover regulatory issues that impact Safeguard’s operations, risk mitigation, enterprise strategic planning, human resources and training initiatives, compliance, litigation and claims management, and mergers, acquisition and joint ventures.

Linda assures that Safeguard’s strategic initiatives align with its resources, leverage opportunities across the company, and contemplate compliance mandates. Her practice spans over 20 years, and Linda’s experience covers 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.


Chief Financial Officer

Joe Iafigliola

Joe Iafigliola is the Chief Financial Officer for Safeguard. Joe is responsible for the Control, Quality Assurance, Business Development, Accounting & 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.


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.


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.


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.


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.


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.


Assistant Vice president of Application Development

Steve Goberish

Steve Goberish, is the assistant vice president of application development for Safeguard. He is responsible for the maintenance and evolution of Safeguard’s vendor systems ensuring high-availability, security and scalability while advancing the vendor products’ capabilities and enhancing the vendor experience.

Prior to joining Safeguard, Steve was a senior technical architect and development manager at First American Title Insurance, a publicly held title insurance provider based in southern California, in addition to managing and developing applications in multiple sectors from insurance to VOIP.

Steve has a bachelor’s degree from Kent State University in Ohio.