Safeguard Discusses How to Minimize Costs and Risks While Managing Code Violations

A November 2011 report by the U.S. Government Accountability Office (GAO) entitled “Vacant Properties: Growing Number Increases Communities’ Costs and Challenges” identified an estimated 10 million vacant properties across the country in April 2010, an increase of 3 million properties from the previous study in 2000. According to the GAO, 10 states have seen the number of vacant properties increase by 70% or more.

Based on this data, it is safe to assume that the number of vacant properties will not decrease anytime soon. Unattended vacant properties deteriorate and contribute to blight, which drives down real estate values and tax revenue. Keeping vacant properties safe, secure and maintained presents financial and administrative challenges for the mortgage industry and municipalities alike.

Even though the vast majority of vacant properties are on a schedule for regular inspections and maintenance, code violations occur: Vacant properties are broken into, inclement weather creates wind and storm damage, people dump trash and debris, a pool cover or fencing around the pool may be compromised, and so forth. All of these events can trigger code violations.

When the process works, city code enforcement officials issue a notice to the mortgage servicer when a violation is noted, and the problem is addressed quickly. When the process fails, however, properties deteriorate, and they impact the quality of life for surrounding neighbors.

Code enforcement officials become frustrated trying to get violations corrected, and servicers risk heavy fines, penalties and tarnished reputations for failing to correct problems in a timely manner. A number of municipalities have even issued criminal citations against the executives of entities holding title to troubled properties.

Local governments each have a wide array of building, housing and property maintenance codes that establish standards for the appearance and safety of properties within their communities. Cities with high volumes of vacant and foreclosed properties have become more aggressive with their housing inspections in response to safety and nuisance complaints from neighbors.

Many local governments also view code enforcement as an opportunity to generate revenues to relieve tightening budgets. As a result of stronger code enforcement actions, servicers face fines and penalties in the thousands of dollars for failure to correct violations that would have cost only hundreds to address initially.

In fact, conversations with code enforcement officials in cities across the country often reveal three violations as the most common, each of which is relatively easy and inexpensive to remedy: an unsecured property, tall grass, and debris in the yard. Most of the time, fines accumulate – not because the servicer knowingly ignored a citation, but because the servicer wasn’t aware of the violation and failed to address it in a timely way.

Consider this case about a property that incurred violations after it was found unsecured as a result of vandalism: The city issued violations for having an unsecured property, failing to maintain the property, having a dangerous structure, failing to inspect and lacking a permit. As it turned out, a master servicer was overseeing a second servicer that had day-to-day responsibility for the property. The municipality was unaware of the servicing arrangement and sent violation notices to the master servicer, which did not notify the city or forward the violations to the appropriate servicer.

When the violations went uncorrected, the city took enforcement action that ultimately resulted in nearly $12,000 in civil penalties, more than $1,000 in fees to cover direct expenses, and additional daily penalties that ranged between $150 and $375 per violation. Had the notice been addressed in a timely way, the servicer would have spent only a few hundred dollars to re-secure the property.

In addition to taking stricter enforcement action and levying stiffer fines and penalties, cities have widened the net of violations they cite. In the past, servicers received code notifications only for violations related to the safety and security pf the structure.

Recently, municipalities have begun issuing citations for dirty floors, carpets and windows, strong odors in the home, and other items the industry views as cosmetic. Because cosmetics are not included in preservation fee schedules and investor allowables for foreclosed properties, servicers may not be reimbursed for these services. Yet, they are responsible to the investor for correcting all code violations.

Similarly, servicers face greater risks, as municipalities have begun to issue violation notices on occupied foreclosed properties for problems ranging from missing smoke detectors and window locks to insufficient heat or hot water and broken sink stoppers. Despite the stronger position municipalities have taken to address code violations, it is important to recognize that municipalities and the mortgage industry are on the same side in the battle to protect property values and maintain the quality of life in neighborhoods. By working and communicating more effectively with code enforcement officials and taking steps to improve their systems and processes, servicers can minimize code violations and the associated fines, penalties and reputational risks.

Effective systems
Servicers cannot fix problems they don’t know about, and code enforcement departments don’t have the resources to search for the right person to notify within a large, multi-office mortgage servicing organization. Code violations can occur before the loan becomes delinquent. Therefore, servicers should identify a single point of contact within their organizations to respond to complaints regarding current loans or a field service provider who serves as their agent to address code violations after a loan becomes delinquent.

Contact names should be communicated throughout the organization and posted on the servicer’s website. Maintaining a single point of contact or intake method for the benefit of municipalities streamlines the notification process.

To manage the sheer volume of properties, servicers also should consider utilizing a code enforcement management system that allows municipalities to post violation notices and enables internal staff to receive, track and manage violations to a successful conclusion. The more efficient and direct the process is between municipalities and servicers to post, monitor and resolve violation notices, the more successful servicers will be in addressing code violations quickly. This is especially critical as code enforcement officials become either less willing or have less authority to negotiate reductions in fines and penalties.

When servicers incur penalties, effective dialogue with municipalities can help to stop the accrual of further penalties and even reduce them. A trained and empowered negotiator who understands local codes can develop case resolution plans that are acceptable to the
municipality and that can alter the timing and nature of enforcement actions by the municipality.

For example, communication with municipalities can help facilitate the extension of grace periods on violations in cases where a servicer or lien holder will soon take possession or control over a property. Upon initial vacancy, when properties have been in violation of certain codes, it is helpful for the servicer or its field service agent to communicate with code enforcement officials about the completion of standard initial services that would likely correct these conditions.

Furthermore, having knowledge of the code violation can improve the servicer’s ability to adjust the initial services work order to sufficiently address the violations. Whenever municipalities can be made to understand what services can or will be performed within certain time frames, they are more likely to suspend enforcement to provide a reasonable time to cure the violation.

Proper procedures
Loans serviced on behalf of the Federal Housing Finance Agency, the government-sponsored enterprises, the Federal Housing Administration and the U.S. Department of Veterans Affairs have guidelines, fee schedules, delegated authority and other options to assist the servicer in protecting and preserving properties. These guidelines, however, do not include provisions to address all of the potential challenges that result in code violations.

Servicers are required to seek approval before certain expenditures can be made. The approval process includes maintaining documentation and obtaining bids and photos before work can be performed to cure the violation. To facilitate the decision-making process and cost reimbursement, servicers must maintain detailed records and supporting documentation. Failure to maintain documentation can result in non-reimbursement for fines, penalties and the costs of work performed. Having a single, concise location to manage violations and retain supporting documentation provides transparency and improves recovery.

Code enforcement departments and the mortgage industry share a common goal to protect the condition and value of vacant and abandoned properties. They also have their own unique challenges. The housing crisis has strained municipal budgets and put more pressure on code enforcement departments to address property complaints. Servicers struggle to maintain growing numbers of vacant properties while complying with myriad local codes and requirements, sometimes putting them in conflict with other laws. Through outreach and dialogue, both sides have begun to listen and share ideas and solutions.

The American Association of Code Enforcement and individual state code enforcement associations have been valuable partners with which to facilitate such dialogue. Representatives from the mortgage servicing industry have participated in educational sessions and roundtable discussions with state and local officials to share expectations and discuss solutions.

The GAO study on vacant properties pointed out the challenges that code enforcement departments and local municipal officials face in identifying a responsible party to maintain properties. Among them are owners who have left their homes, outdated and insufficient property records, and insufficient staffing to identify the right party.

The mortgage servicing industry has come a long way in developing the knowledge and tools to become true partners with municipalities and code enforcement officials across the country to effectively address code violations. And it is in the industry’s best interest to utilize such relationships.

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About Safeguard
Safeguard Properties is the largest privately held field services company in the country. Located in Cleveland, Ohio and founded in 1990 by Robert Klein, Safeguard has grown from a regional preservation company with a few employees  and a handful of contractors performing services in the Midwest, to a national company with nearly 1,000 employees. Safeguard is supported by a nationwide network of subcontractors able to perform any requested superintendence, preservation, and maintenance functions, as well as numerous ancillary services in the U.S., the Virgin Islands, and Puerto Rico.



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.



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”.


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.


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, 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.


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.


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.