Servicing Management “Increase REO Marketability While Controlling Repair Costs”

Robert Klein contributed an article to the June 2008 edition of Servicing Management magazine.

Increase REO Marketability While Controlling Repair Costs

Assuring that REO properties can compete with offerings in the traditional home market is key to successful asset disposition.


The increase in real estate owned (REO) properties on the market nationally, as well as the length of time these properties remain on the market, has been well documented.

The problem is expected to grow worse as adjustable-rate mortgage resets continue to hit the market. According to The Wall Street Journal, mortgage foreclosures are currently at l.39%, up from l.08% at the end of 2007 and 0.58% in 2006.

At the same time, the traditional real estate market has been hard-hit in virtually every corner of the country as sales decline, home values decrease and financial institutions tighten their loan standards. The Wall Street Journal also reported recently that existing home sales fell from an annual rate of 6.11 million in March 2007 to 4.93 million in March 2008 – a decrease of more than 19%.

It is believed that REO properties now account for 10% to 20% of existing homes on the market. That means that in a flooded housing market, REO properties face stiffer competition from the traditional home market than from other REO properties.

Gone are the days when REO properties can be sold as-is or placed on the market with basic trash-out and maintenance services. Today, REO sellers must compete with – and therefore think like – traditional homeowners when placing properties on the market.

Clearly, there is a difference in what a seller can realistically invest to maximize the return on a $400,000? property in California or Florida, versus a $100,000 property in the Midwest. Sellers with high-value properties in their portfolios are increasingly investing upwards of $10,000 to $20,000 to make interior and exterior improvements that have the greatest potential to yield better returns and shorten the time an REO property remains on the market.

Even with lower-value properties, REO sellers can maximize the return with minimal investment. The key is to make the property as appealing as possible to a home buyer looking for a home to live in and raise a family in.

When making property disposition decisions, REO sellers must balance three significant cost factors: market value, repairs and improvement expenses, and carrying costs while properties remain in the seller’s portfolio.

Historically, field servicers have focused primarily on property preservation, with a goal of protecting the asset from further physical decline by securing, maintaining and inspecting the property on a regular basis. However, in this highly competitive REO market, the field servicing industry must adapt its REO service offerings to effectively address all three cost factors relative to the property value and the return on investment the seller can realistically expect to achieve.

Market value

Many factors influence market value. Certainly, the glut in the housing market nationally affects property values as do economic conditions, shifting populations, the attractiveness of a neighborhood or community, and the age and condition of the property.

With REO properties, another factor that affects value is the REO taint. When prospective buyers see an obvious REO property, they often mentally discount the value of the property, expecting to encounter a desperate seller and desperate property.

A desperate-looking property is more likely to attract an investor looking for a deal, compared to a buyer in the market for a home to live in. Prospective home buyers are looking for a home they can imagine themselves living in, and feeding that imagination is essential to increasing the perceived value of a property.

REO sellers are beginning to recognize what viewers of the popular HGTV television programs are learning strategic improvements and maintenance can add significant value to REO properties by making the home appeal to the buyer’s emotions and senses. Even in a slow market, plenty of buyers are in the market for homes.

Curb appeal is important in any market, but in a competitive market in particular, it stops prospective buyers from fmding reasons to deduct value the minute they drive up to the property.

Real estate agents know that curb appeal is an essential first step in attracting a home buyer. No matter what a seller does on the inside of the property, if the outside doesn’t draw the buyer in, the emotional connection is lost. The effect is even worse ifthe other homes on the street have nicely maintained yards.

This is why REO sellers are beginning to move beyond minimal grass cuts and yard clean-up. With higher? value properties, sellers are increasingly authorizing exterior paintingand repairs, trimming of bushes and trees, mulching, weeding and other services to improve the curb appeal of the property.

But with lower-value properties as well, sellers need to maintain yards to the same standards as those of other homes in the neighborhood. These requirements mean weekly or bi-weekly grass cuts, weeding of planting beds, trimming of overgrown trees and shrubs, and removal of yard clutter.

Repair money

On the inside, even when REO properties can’t justify the expense to make improvements, their appeal and value can be greatly enhanced with regular maid service, yet too few REO sellers recognize the importance.

Maid services to remove cobwebs, replace burned-out light bulbs, wash windows, clean floors and carpets, wipe down counters and other surfaces, and make sure bathrooms and kitchens are clean and fresh can add thousands of dollars to the value of any property, at minimal cost.

For higher-value properties, thorough cleanillg and repairs, a fresh coat of paint, new carpet and flooring, and updated lighting and fixtures make an REO property more attractive to traditional home buyers intending to live in the home. Many buyers are willing to pay more money for a home that is move-in ready and that will not require them to invest more time and money after they move in.

Of course, because even basic remodeling and repairs cost money, REO portfolio managers must carefully consider these expenses when making REO disposition decisions. The difficulty in making the choices is that the bid process for an individual property can be cumbersome and time-consuming, especially when managers are responsible for large portfolios across the country.

In this area, field servicers can help by identifying creative and in?novative ways to streamline pricing and bidding processes so that portfolio managers can make the most efficient and effective decisions to maximize their return on investment.

One strategy is to offer a flat-fee pricing model For example, if REO managers work with a flat-fee pricing model and know that painting will cost $1.50 per square foot based on floor space, that carpet removal and installation will cost $12 per square yard, and that vinyl flooring will cost $15 per square yard, they have enough information to make more informed decisions about property disposition, weighing the opportunity for increased return on investment and a faster sale.


The ultimate goal of an REO manager is to move a property out of its portfolio as quickly as possible and at the highest return possible so the cash can be reinvested. The longer the property languishes, the more money is lost.

Therefore, to make REO properties as marketable as possible, it is essential that REO managers, their brokers and their field servicers work as a team. The broker’s role on the team should be to help the REO manager determine the potential market value of the home and the appropriate level of investment that will result in the most efficient sale. Investing too much may mean that the property is priced out of the market; investing too little may make the property less competitive with traditional homes.

The job of the field servicer is to assure that the property is in the best condition possible, appropriate to the market.

What does that mean? In addition to the initial repairs and maintenance, the property interior should receive maid-style refreshing service on a regular basis – floors swept, bathrooms cleaned, surfaces dusted and stale odors eliminated. After all, sellers with traditional homes on the market take these steps to make their properties more appealing.

Outside, the lawn should be cut as regularly as the lawns of other properties on the street, and it should receive the same attention to other landscaping details as well.

Additionally, it is important for the broker and the field servicer to work together on behalf of their mutual customer to quallty-check one another. If the field servicer is on?site and discovers, for example, that the real estate sign is missing from the front yard, a call to alert the broker is in order.

At the same time, if the real estate broker is showing the house and notices that something needs to be repaired, a call to the field servicer can assure that the issue is addressed as quickly as possible. In a competitive real estate market, REO properties can be as marketable as any traditional homes they compete with. What it takes is a spirit of cooperation, creative thinking and new approaches to add and retain value.



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.