Where Does the Money Go? Maybe We Should Ask the Michigan Legislature. . .

Legislation Update
March 17, 2016

In Michigan, foreclosure is not only a contractual right, but a statutory right as well. Michigan is primarily a foreclosure by advertisement state; however, foreclosure may proceed through the court system as well. This is referred to a judicial foreclosure. The State’s Legislature has enacted statutes that regulate almost every part of a foreclosure by advertisement, from publication and posting requirements, requirements for the sale itself, and also post-sale rights. The one area of a foreclosure by advertisement in which the Legislature has been silent is with respect to how the proceeds of the foreclosure sale are to be distributed. The judicial foreclosure statutes address this topic in MCL §600.3135, stating that the proceeds of every judicial sale shall “be applied to the discharge of the debt adjudged by the court to be due and of the costs awarded.” The foreclosure by advertisement statute addresses surplus proceeds in MCL §600.3252 by addressing money remaining “after satisfying the mortgage on which the real estate was sold.” However, the Legislature has been silent on the initial distributions of proceeds from a foreclosure sale in a standard foreclosure by advertisement.

The initial distribution of foreclosure by advertisement proceeds is a relatively new issue in Michigan. Generally, the foreclosing mortgagee makes the initial bid at the actual foreclosure sale. The typical practice in the past was that the foreclosing mortgagee would place an initial bid for the total amount of the debt owed under the mortgage and underlying note. Recently, however, mortgage servicers and lenders have been venturing into the realm of obtaining property values and basing their initial bids on the fair market value of the property, as opposed to the amount owed on the loan. This has opened up a new market for third-party bidders to purchase properties at foreclosure sales. It has also uncovered the question of how foreclosure sale proceeds should be distributed when the foreclosing mortgagee does not initially bid the amount owed on the loan.

Foreclosure sales, both judicial and non-judicial, in Michigan are conducted by the Sheriff’s Department of the county in which the property is located. Currently, the Sheriff’s Departments across the state of Michigan all have the same procedure when it comes to releasing sale proceeds to the foreclosing mortgagee. In the event of a third-party purchase, where the winning bid is above the initial bid of the foreclosing mortgagee, the Sheriff’s Departments only release the amount of the foreclosing mortgagee’s initial bid, without taking into consideration the amount due on the loan. Of course, the question arises: How could the Sheriff’s Department know the amount owed on the loan? Each county’s Sheriff’s Department is privy to the Notice of Sale, which contains the amount due on the loan at the time of said notice, as well as the Foreclosure Sale Packet, both of which are provided to the Sheriff’s Department in advance of the sale. . Theoretically, the entirety of the sale proceeds, up to the amount owed on the loan, should be released to the foreclosing mortgagee at the sale. This topic has been broached with some Sheriff’s Departments, but understandably, with the lack of statutory guidance, the common response is that the way things have been done in the past is the way they will continue.

So, the question then becomes, what remedy do foreclosing mortgagees have when the proceeds from a foreclosure sale do not satisfy the amount owed on the loan, and the Sheriff’s Department is holding additional proceeds from the sale? As stated before, the Legislature has addressed the procedure for claiming surplus funds existing following a foreclosure sale, providing that “…after the sale of real estate…any surplus money after satisfying the mortgage on which the real estate was sold, and payment of the costs and expenses of the foreclosure sale, the surplus shall be paid over by the officer or other person on demand to the mortgagor, his legal representatives or assigns” See MCL §600.3252. Further pursuant to MCL §600.3252, any person claiming priority to the funds, other than the borrower, or anyone claiming under the borrower, may make a claim to the Sheriff’s Department, which must then transfer the funds to the Circuit Court for determination as to the validity of the claim. Once the funds have been transferred to the Circuit Court, the claimant has the opportunity to plead its entitlement to the remaining foreclosure proceeds. Typically, the Circuit Court actions are considered In Re actions as they pertain to proceeds claimed based on a claim made on real property. MCL §600.3252 simply provides that a claimant must prove to the Court its right to the proceeds. In fact, in the recent decision of Moon Lake Condominium Association v. RBS Citizens et al, unpublished opinion per curiam of the Court of Appeals, issued November 12, 2015 (Docket No. 323576), the Michigan Court of Appeals confirmed that a claimant is not required to provide notice to any other parties that would claim a right to the remaining sale proceeds. Once the claimant has provided proof sufficient for the Court, the Court will enter an order granting the claimant’s request and release the funds to the claimant.

Although MCL §600.3252 clearly does not apply in the situation where the foreclosing mortgagee has not been satisfied, it provides some guidance towards a remedy that can be claimed by an unsatisfied foreclosing mortgagee where proceeds remain following a foreclosure sale. At the moment, the Courts seem to be allowing unsatisfied mortgagees to make claims based on the process outlined by MCL §600.3252, even though the claims are not technically made pursuant to the statute. Some firms, however, have taken the path of filing standard civil lawsuits naming the borrowers as the defendants, and pursuing judgments stating that the foreclosing mortgagee is entitled to the proceeds. Since the Legislature is silent regarding this situation, it cannot be said with certainty at this time which course of action is technically the most proper.

With the rise of mortgage lenders and servicers considering fair market value in the amount they are willing to bid at a foreclosure sale, it may be time for mortgage lenders and servicers to lobby the Michigan Legislature to enact a clear procedure as to how foreclosure by advertisement proceeds are to be distributed in an effort to ensure there is no longer uncertainty in these third-party purchaser situations.

Source: DS News



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.