Taking a Buckshot Approach to the Housing Crisis

Robert Klein, Founder and Chairman of Safeguard Properties, contributed an article to Mortgage Servicing News titled, Taking a Buckshot Approach to the Housing Crisis.

Taking a Buckshot Approach to the Housing Crisis

Even though the U.S. economy is showing signs of recovery from the “Great Recession,” most industry experts predict that it will be some time before the mortgage industry can significantly reduce the portfolios of foreclosed properties.

The Mortgage Bankers Association reported that in the first quarter of 2010, almost 37% of new foreclosures came from fixed-rate prime loan mortgages held by the safest borrowers with the highest credit scores. An additional 21% of foreclosures in the quarter were on adjustable-rate mortgages made to creditworthy borrowers.

As long as the nation’s “jobless recovery” continues and unemployment rates hover around 10%, loan modification programs probably will continue to meet with limited success, and we will continue to see large inventories of defaulted and foreclosed properties.

No silver bullet will reduce servicers’ property portfolios, but the industry has been successful in taking a “silver buckshot” approach to minimize the impact.

Here are five areas in which the industry either has made or has the potential to make the greatest impact to protect the viability of properties and return them to family homeownership as quickly as possible.

No. 1: Holding the line on property preservation

Every football coach knows that to hold the line and keep from losing ground, you have to focus on the basics of blocking and tackling. The same goes for vacant properties. Especially as volumes increase, we can’t let our guard down. The better preserved a property is at foreclosure, the greater its chances are to sell faster and at a higher value.

Despite record volumes, field servicers have continued to improve operations, technologies, training and recruitment processes to keep up with demand and maintain quality standards.

Property preservation companies also are enlisting the help of neighbors, who have a vested interest to assure that a vacant property doesn’t affect their property values or risk the safety and security of their families. One program that has been successful in engaging neighbors has been Safeguard’s “Good Neighbor” initiative, in which door hangers with the company’s contact information are left at neighboring properties. Since implementing the program, the company has received an average of 1,200 calls per day in communities across the country to report everything from minor maintenance issues to significant safety concerns.

Alert neighbors have helped to prevent millions of dollars in property damage, avoid code violations, reduce vandalism and maintain the safety and security of properties and neighborhoods. We need to do everything we can to continue to support and encourage their vigilance.

No. 2: Strengthening communications between the industry and code enforcement

In the past, the industry’s goal was to stay off the radar screen of code enforcement officials. Today we know better. Code enforcement departments care more about preventing code violations than issuing citations. As an industry, we want to be on the radar screen of code enforcement officials, and the “MERS initiative” has been one of the most effective programs to make sure we are.

A creation of the Mortgage Bankers Association, this initiative gives code enforcement officials free access to the Mortgage Electronic Registration System, containing loan information on more than 65 million properties across the country. Hundreds of cities now utilize the MERS system in place of, or in tandem with, vacant property registration ordinances to locate a responsible contact when a property has a code violation.

Admittedly, the MERS Initiative isn’t a complete solution but it is a useful tool to connect code enforcement officials with servicers. Because of the successful contacts made through MERS, servicers have reduced or prevented countless code violations, security issues and maintenance problems, saving millions of dollars and keeping properties and neighborhoods safer and more secure.

Servicers that do not participate in MERS should be encouraged to do so. It is worth the subscription. Those that are on the system should be sure that their mortgage information is updated with a property preservation contact so that code enforcement officials can find the right person to address a problem more quickly.

No. 3: Making REOs stand out in the market

In today’s saturated real estate market, even traditional-sale homes are heavily discounted to help them sell more quickly. As a result, REO properties have a new level of competition.

The key to selling REO properties today is making the right investment to deliver the best “bang for the buck” that will help the property sell faster and maximize the return. Recognizing this, the industry has worked hard to make strategic investments in REO properties to maximize selling opportunities.

Even low value properties can stand out with only a modest investment. It doesn’t cost much to mow the lawn and clean up the yard, scrub the house from top to bottom, tighten what’s loose and replace burnt-out light bulbs. Yet these basic efforts can pay off in huge dividends when potential buyers don’t have to look past dirt and debris to imagine raising a family in the home.

Just as important as making the right investment and keeping the property clean and maintained have been efforts to establish more effective communications between the servicer, the property preservation company and the broker.

Once the property is listed, keeping all parties engaged and coordinated, continuing to monitor the property, as well as the market, and making sure that the property remains in top form is essential. Checks and balances between the broker and the property preservation contractors to identify and address issues quickly helps to assure that the property remains in the best possible condition and that the property is poised for a faster and higher value sale.

No. 4: Support foreclosure prevention

Preventing a foreclosure from happening at all is the best way to whittle down portfolio volumes and avoid the inevitability of even higher post-foreclosure loan losses. This is why the short-sale market is so hot right now.

Even though field servicers aren’t directly involved in short sales, they can be helpful to the process. In Safeguard Properties’ system alone, for example, more than 40,000 presale properties are listed for sale. These are 40,000 properties in default, some vacant but mostly occupied, in which the owner is attempting to sell the property. If history is any indicator, if these homes don’t sell, many will eventually be abandoned by the homeowner. As vacant properties, they are likely to lose value faster, and cost the servicer more in maintenance and repair costs.

As a pre-emptive measure, field servicers can routinely report “presale for sale” information to its servicing clients. These are ripe opportunities for servicers to reach out to the homeowner to initiate a short sale as an alternative to abandonment, and a potentially long and costly property preservation process.

There are other steps we can take to help prevent foreclosures. We can continue to encourage frightened borrowers to reach out to their servicers and attempt workouts and loan modifications. In particular, we should support the efforts of foreclosure prevention programs and their networks of nonprofit housing and credit counselors who help keep borrowers in their homes.

Even if these programs meet with limited success, some success is better than none at all. We know that an occupied property is better protected than a vacant one. Everything we can do to support homeowner retention should be done for everyone’s benefit.

No. 5: Accelerating vacant properties to foreclosure

While everything should be done to try to keep borrowers in their homes, the fact is that many defaulted homes will be abandoned by their owners for a variety of reasons.

When these homes are first abandoned, most are in livable condition. Over time, however, any vacant property will begin to deteriorate, even those that receive regular inspections and maintenance. The reason is that vacant properties are susceptible to more expensive structural damage because they are not heated, cooled and ventilated the way occupied properties are. They also are more frequent targets for vandalism.

The longer a property sits vacant, the more expensive it is for servicers to inspect and maintain, and the more value it loses. Depending on individual state laws, the foreclosure process could range from a few months to more than a year.

The problem with foreclosure laws is that they do not differentiate between occupied and vacant properties. Certainly, there is value in an extended foreclosure process to protect homeowners and try to prevent them from losing their homes.

However, when properties are abandoned, there is no homeowner to protect. A lengthy foreclosure process involving a vacant property only puts the property and the neighborhood at greater risk. A prolonged foreclosure process also prevents a vacant property from being reoccupied more quickly.

As an industry, we must get the word out and urge state legislators to review their foreclosure processes. If states updated their foreclosure laws to differentiate between vacant and occupied properties and allowed vacant properties to accelerate to foreclosure, all sides would benefit.

Communities would be safer because fewer vacant properties would pose safety risks to neighborhoods, and the properties would be less of a burden on taxpayers. Property values would be maintained, and they would support a stronger tax base. Properties also would be more likely to attract homebuyers who would take better care of the properties and raise families there.

In the end, working together to promote responsible family homeownership and protecting our housing stock so that it contributes to a community’s vitality and tax base is how we will work ourselves out of today’s housing crisis.

Servicers, investors, code enforcement officials, property preservation companies, neighborhood organizations, legislators, nonprofits and community leaders have work with a spirit of determination and collaboration to address an unprecedented housing crisis.

It is a crisis that wasn’t created overnight, and it won’t be solved overnight. We have learned that finger pointing and assigning blame are a waste of time and energy. And we have learned that we are all better served when we focus our energies on developing solutions that benefit everyone.

Robert Klein is founder and chairman of the board of Safeguard Properties, Valley View, Ohio.

To view the online article, please click here

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 over 700 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.



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.