Monday, November 25, 2013

National Property Preservation Conference 2013


I had the pleasure of joining my esteemed colleagues at the Safeguard National Property Preservation Conference this month to discuss the State of the Property Preservation Industry.  I always enjoy the chance to discuss pressing industry issues and learn from with this group. 

I also have the opportunity to sit with an equally impressive group to discuss how prior and new regulatory mandates are shaping the industry’s expectations and driving best practices for all aspects of the business.

Check out the summaries below and visit the conference website to learn more. 

State of the Industry

Ed Delgado, Five Star Institute

Colleen Hernandez, Homeownership Preservation Foundation
Robert Klein, Safeguard Properties
Jack Konyk, Weiner Brodsky Kider
Rick Sharga,
Ann Thompson, Consumer Financial Protection Bureau
Session Overview
During this session the panelists provided a high-level overview of the most current issues within the mortgage servicing industry. Ed Delgado led a dynamic conversation on topics such as regulatory oversight, homeownership, the role of the property preservation industry, and the industry’s future.

Regulatory Oversight
The panelists began by discussing government oversight on the mortgage servicing industry and how policymakers formulate rules and regulations. They explained that new laws are created by a group of well-intended legislators that are not necessarily housing experts, often leaving regulatory bodies to figure out how to implement guidelines. Increased directives can result in confusion and in the end make it more difficult for the average homebuyer to purchase a home.

The panelists examined how foreclosure timelines vary from state-to-state and short sales can be problematic in various ways. The panel also discussed that foreclosure practices in use prior to the housing crisis were not modified to deal with the volume in today’s market. As the number of foreclosures has grown and timelines become longer, property preservation companies have created new procedures to deal with the increase.

The behavior of homeowners has changed in the aftermath of the housing crisis. Panelists described the financial stress that homeowners feel is due to a variety of factors, from credit card debt to underemployment and the growing need to drive consumer attitudes towards living within their means. To solve this issue it is necessary to work with homeowners to examine all financial limitations that extend beyond mortgage difficulties.

Role of Property Preservation
Panelists pointed out the important role property preservation plays when efforts like financial education and loan modifications fail. They emphasized that first and foremost the goal is to keep consumers in their homes, but those efforts do not always succeed and there must be a plan in place to deal with vacant and foreclosed properties.

The panelists discussed how the property preservation industry has changed in response to the housing crisis over the last five years. The industry had to adjust, putting controls and measures into place to deal with an increased volume. Today the property preservation industry continues to evolve and works to support community stabilization.

Industry’s Future
Panelists shared their thoughts on what the future holds for the industry and homeownership. Some of the ideas were that single family rentals will be a large part of the housing market because home ownership may not increase, Americans must strive to overcome their debt that prevents them from becoming homeowners, and homeownership demand will return, but not without challenges.

The Regulatory Environments Impact to Property Preservation

Linda Erkkila, Safeguard Properties

Nickie Bigenho, Mortgage Contracting Services
Dennis Gierula, JPMorgan Chase
Rob Hicks, Lender Processing Services
Robert Klein, Safeguard Properties
Matt Martin, HUD
Michael Merchant, City of Chicago
Ann Thompson, Consumer Financial Protection Bureau

Session Overview
With the increased scrutiny placed on clients and servicers today, the regulatory environment is constantly changing and having a large impact on the industry as a whole. The panel discussed how prior and new regulatory mandates are shaping the industry’s expectations and driving best practices for all aspects of the business.

Compliance Management Systems (CMS)
A CMS is how a “supervised entity” handles its compliance responsibilities, from implementing, internally communicating, and measuring performance, to taking corrective action and making updates as needed. The panel stated that the most common weakness identified among financial institutions is deficient periodic monitoring and independent compliance audits. Risks should be identified and timeframes should be determined as appropriate for industry needs and business structure.

Background Checks
Background checks are not specifically required of third party providers, but they are recommended as part of overall risk management and mitigation. The panel noted that the industry needs to better define background check requirements and determine what level of scrutiny is appropriate. It is important to maintain a process that does not interfere or jeopardize the contractor’s status as a non- employee, and there is also the fundamental concern of the Fair Credit Reporting Act requirements as well.

Audits have become more thorough and complex over time. Historically audits were relatively short scripted. Today’s audits are much more thorough. They may happen quarterly, with advance requests for data, while lasting several days and possibly including IT audits as well. Audits will continue to evolve. Audits can be intrusive, but their purpose is to identify risk and resolve potential or identified issues before they escalate or become the focus of regulators. Regulators coordinate to ensure there is consistency and no conflicts, though there may be varying levels of control required in some cases. The panel addressed the possibility for centralized audits in the future, as the process is still being defined. It was acknowledged that the challenge of third party audits is the question of, “Who audits the auditors?”

Fast-Track Foreclosure and Anti-Blight
The panel agreed that fast-track foreclosures have a positive impact on communities and the process should be used more, as such initiatives are anti-blight and anti-crime initiatives. However, they acknowledged that the process can be challenging because of conflicting time constraints.
Vacant building ordinances have also made a positive impact on blight. Panelists agreed that Chicago’s ordinances should be a model for other communities, as it is balanced and clear. It was suggested that servicers should work to keep regular communication with code officials to remain aware of big issues in the community.

In Conclusion
The increase in regulatory oversight requires the entire industry to adjust processes and procedures, but there are many tools available to facilitate these new requirements. Industry leaders can and should work together to define best practices and succeed in this new environment.

About the National Property Preservation Conference
In 2004, the National Property Preservation Conference was established by Safeguard Properties Founder and Chairman Robert Klein to provide leaders and servicers from across the mortgage industry an opportunity to gather and focus solely on preservation. Each year, pressing issues in the industry are discussed and solutions are developed. The conference has become a forum for strengthening partnerships, cooperation, and support throughout the industry, which is imperative to the continued success of all involved in mortgage servicing.

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