USFN Spring Loan Management & Servicing Seminar
The USFN Loan Management & Servicing Seminar, held at the Omni Fort Worth Hotel in Fort Worth, TX, brought together a wide array of mortgage servicing professionals, including investors, attorneys, field services companies, and all levels of management in the default servicing world. This conference stimulated discussions about compliance, the CFPB, loss mitigation, current trends in default servicing, fast-track foreclosure, servicer risk management and more. Safeguard was honored to moderate a session and participate as a panelist on another. Summaries of these sessions are below.
Fast-Tracking Vacant Foreclosures: The Blight Solution
Steve Meyer, Safeguard Properties
Timothy Myers, Orlans Associates, P.C.
Stacey Baumann, MSI
Rosemarie Diamond, Phelan, Hallinan and Schmieg
Kayo Manson-Tompkins, The Wolf Firm
This session focused on the current state of the industry. Discussions centered around the impacts of new legislation and regulation, as well as how these regulations have affected the foreclosure time line.
New Jersey, Florida and New York continue to have the longest foreclosure timelines of all the states. These long timelines are resulting in homes sitting for longer periods of time in a lengthened foreclosure process causes a greater potential for the home to deteriorate. New fast-track legislation is designed to help expedite the process, but is in its infancy.
The industry continues to faces legal and regulatory challenges, such as cities looking to take properties through eminent domain, additional judicial requirements and property registration requirements. The expert panel acknowledged that is an ongoing commitment from industry members to remain current with legal changes and that the industry as a whole is working together to comply with new and changing requirements.
The session provided hope that new fast-tracking laws being implement will help to reduce the foreclosure timelines on those properties that are truly vacant and abandon. This will result in shorter timeframes to get the homes back on the market.
Legislative & Regulatory Trends and Updates
Lee Perres, Pierce & Associates, P.C.
Ryan Bourgeois, Barrett Daffin Frappier Turner & Engel, LLP
Linda Erkkila, Safeguard Properties
Hilton “Hutch” Hutchens, Hutchens Law Firm
Lois Vitti, Vitti & Vitti & Associates, P.C.
During this session the panel discussed the disconnect between laws, regulations, and courtrooms. They used service of process for Texas home equity loans as an example. The current rules for service of home equity expedited foreclosures in Texas only require service via certified mail. Several judges feel that service via only certified mail violates due process if the notices are not claimed by the respondents. These rules were drafted by the Texas Supreme Court and they are of the opinion the rules are in compliance with constitution. This can put lenders in the position of having to go above and beyond the requirements of the rules to satisfy certain judges.
There also appears to be a disconnect between judges and the foreclosure process, noting a continuation of loss mitigation programs attempting to re-write contract between lenders and borrowers during the proceeding. The push is for reduction of interest rates, balloon payments, and new loans. The concern is that changes in individual counties conflict with local laws. Attorneys are seeing instances where a judge rewrites proposed order which then does not comply with the law.
Vacant and Abandoned
There is a tension in defining “vacant and abandoned”. The standards differ among the states. The cities want to protect the neighborhoods and judges want to protect the borrowers (i.e. requiring court orders to secure properties in default).
The panel also discussed vacant property registration requirements. Many cities are enacting and most servicers are complying due to compliance pressure from regulator, auditor and self-audits. There are approximately 1,660 vacant property registration requirements countrywide.
Recently, there has been an emerging initiative of cities looking to requirement foreclosure bonds, which require servicers to pay a “maintenance bond” for repair work, in hopes of discouraging walkaways. There is concern about how these bonds will be administered, drawn upon, and reimbursed post-sale.
The panel focused on the new CFPB rules, as they relate to property preservation, noting the focus on third-party oversight and compliance management systems. While the CFPB only relates to consumers, complete risk mitigation requires total complaint reporting beyond the consumer and includes solid tracking and resolution.
Background checks are also a key issue in third party oversight, the implementation of which bring possible concerns for identifying the right hiring criteria, labor supply, increased expense and disparate impact charges.
Mobile Home Legislation
A manufactured home (MH) is personal property when purchased, and like a vehicle a certificate of title is issued by the Department of Motor Vehicles. Once an MH is “affixed” to real estate, that certificate of title should be cancelled by the owner, as the MH is now considered real estate. However, the certificate of title is usually never cancelled by the owner. When a subsequent property owner defaults on a mortgage secured by the MH and the real estate, if the certificate of title was not cancelled, this forces the lienholder to pursue foreclosure by judicial foreclosure.
In a judicial foreclosure, the lawsuit allows the parties to make any number of claims, and can be expensive and slow. There is new legislation stating that the record owner of an MH that has been converted to real property can submit a form affidavit to the Department of Motor Vehicles and request the MH certificate of title be cancelled; forever making the MH real estate. This allows owners to market, encumber, and sell the property more easily.
The USFN Spring Loan Management & Servicing Seminar was held in Ft. Worth, TX.