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USDA: Handbook Updates: Loss Claim and Loss Mitigation

Investor Update
January 27, 2020

Source: USDA

The Rural Housing Service (RHS or Agency) published a final rule on December 26th, 2019, implementing changes to the Single Family Housing Guaranteed loan program (SFHGLP) regulation to streamline the loss claim process for lenders who have acquired title to property through voluntary liquidation or foreclosure; clarify that lenders must comply with applicable laws, and better align loss mitigation policies with the mortgage industry. The effective date of these changes is April 24th, 2020. In order to prepare for these changes, the Agency has published advanced copies of new 3555 Handbook Chapters 18 and 19 on our training and resource website. These advanced copies are posted to assist in preparation for the April 24th effective date and should not be considered current guidance.

Changes include:

Loss Claim Process:

The previous Chapters 19 and 20 in HB-1-3555, have been combined into one newly revised Chapter 19, Loss Claims – Collecting on the Guarantee. The chapter revisions include:

• Elimination of the nine-month marketing period.

• Elimination of estimated net recovery calculation.

• Streamlined process for valuation of REO property.

• Use of Veterans Administration’s Net Value Factor for calculation of property preservation costs.

• Lenders will be required to submit a complete loss claim package within 60 days of the foreclosure, acquisition or possession date of the security property.

• Lenders will be required to submit loss claims electronically.

This new process will eliminate the need for REO disposition plans and implements a streamlined approach in processing timely loss claim payments to lenders. The change in the regulation is outlined in 7 CFR 3555.354 and 3555.356.

Loss Mitigation Process:

 HB-1-3555, Chapter 18, Servicing Non-Performing Loans – Accounts with Repayment Problems, has been revised with the following:

• Greater emphasis on payment reduction as the primary driver of loss mitigation.

• Requirements on the Modified Interest Rate has been updated to match the waiver issued in April 2018.

• Mortgage Recovery Advance (MRA) option will be available as a stand-alone option.

Furthermore, 7 CFR 3555.51(b)(1) is revised to clarify that in addition to complying with Agency laws and guidance, lenders must comply with applicable federal, state and local laws including Consumer Financial Protection Bureau (CFPB), Real Estate Settlement Procedures Act (RESPA) and Truth in Lending Acts (TILA).

Questions regarding this announcement may be directed to Richard Kane at Richard.Kane@usda.gov or by telephone at (202) 720-0320.

Thank you for your support of the Single-Family Housing Guaranteed Loan Program!

Help Resources

Policy Questions
Customer Service Center
Phone: 866-550-5887
Single Family Housing Guaranteed Loan Division
Phone: 202-720-1452

USDA ITS Service Desk Support Center
For e-Authentication assistance
Email: eAuthHelpDesk@ftc.usda.gov
Phone: 800-457-3642, option 1 (USDA e-Authentication Issues)

Rural Development Help Desk
For GUS system, outage or functionality assistance
Email: RD.HD@STL.USDA.GOV

Phone: 800-457-3642, option 2 (USDA Applications); then option 2 (Rural Development)

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CEO

Alan Jaffa

Alan Jaffa is the Chief Executive Officer for Safeguard Properties, 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® Award finalist in 2013.

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Esq., General Counsel and EVP

Linda Erkkila

Linda Erkkila is the General Counsel and Executive Vice President for Safeguard Properties, with oversight of legal, human resources, training, and compliance. Linda’s broad scope of oversight covers regulatory issues that impact Safeguard’s operations, risk mitigation, strategic planning, human resources and training initiatives, compliance, insurance, litigation and claims management, and counsel related to 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. She has practiced law for 25 years and her experience, both as outside and in-house counsel, covers a wide range of corporate matters, including regulatory disclosure, corporate governance compliance, risk assessment, compensation and benefits, litigation management, and mergers and acquisitions.

Linda earned her JD at Cleveland-Marshall College of Law. She holds a degree in economics from Miami University and an MBA. Linda was previously named as both a “Woman of Influence” by HousingWire and as a “Leading Lady” by MReport.

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COO

Michael Greenbaum

Michael Greenbaum is the Chief Operating Officer of Safeguard Properties, where he has played a pivotal role since joining the company in July 2010. Initially brought on as Vice President of REO, Mike’s exceptional leadership and strategic vision quickly propelled him to Vice President of Operations in 2013, and ultimately to COO in 2015. Over his 14-year tenure at Safeguard, Mike has been instrumental in driving change and fostering innovation within the Property Preservation sector, consistently delivering excellence and becoming a trusted partner to clients and investors.

A distinguished graduate of the United States Military Academy at West Point, Mike earned a degree in Quantitative Economics. Following his graduation, he served in the U.S. Army’s Ordnance Branch, where he specialized in supply chain management. Before his tenure at Safeguard, Mike honed his expertise by managing global supply chains for 13 years, leveraging his military and civilian experience to lead with precision and efficacy.

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CFO

Joe Iafigliola

Joe Iafigliola is the Chief Financial Officer for Safeguard Properties. Joe is responsible for the Control, Quality Assurance, Business Development, Marketing, Accounting, and Information Security departments. At the core of his responsibilities is the drive to ensure that Safeguard’s focus remains rooted in Customer Service = Resolution. Through his executive leadership role, he actively supports SGPNOW.com, an on-demand service geared towards real estate and property management professionals as well as individual home owners in need of inspection and property preservation services. Joe is also an integral force behind Compliance Connections, a branch of Safeguard Properties that allows code enforcement professionals to report violations at properties that can then be addressed by the Safeguard vendor network. Compliance Connections also researches and shares vacant property ordinance information with Safeguard clients.

Joe has an MBA from The Weatherhead School of Management at Case Western Reserve University, is a Certified Management Accountant (CMA), and holds a bachelor’s degree from The Ohio State University’s Honors Accounting program.

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Business Development

Carrie Tackett

Business Development Safeguard Properties