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

Moderator

Ed Delgado, Five Star Institute

Panel

Colleen Hernandez, Homeownership Preservation Foundation

Robert Klein, Safeguard Properties

Jack Konyk, Weiner Brodsky Kider

Rick Sharga, Auction.com

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.

Homeownership

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

Moderator

Linda Erkkila, Safeguard Properties

Panel

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

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.

Hope Now Quarterly Fly-In

Last week I had the chance to join some of my colleagues in the housing industry at the HOPE NOW Quarterly Fly-In.  I cannot say enough good things about this organization that works to keep Americans in their homes. 

To learn more about HOPE NOW and our discussion last week, check out the summary below. 

Moderator:  Laurie Maggiano, Servicing and Secondary Markets Program Manager, Office of Research, Markets, & Regulations, Consumer Financial Protection Bureau

Speakers: 

Robert Klein, Chairman and Founder, Safeguard Properties
Peter Skillern, Executive Director, Reinvestment Partners
Margo Geffen, Twin Cities Community Lank Bank LLC
Margaretta Lin, Esq., Department of Housing and Community Development, City of Oakland

On Thursday, October 24, Robert Klein joined a group of experts at the Hope Now Quarterly Fly-In to discuss vacant and abandon properties.  HOPE NOW is an alliance between counselors, mortgage companies, investors, and other mortgage market participants. This alliance is designed to maximize outreach efforts to homeowners in distress to help them stay in their homes and create a unified, coordinated plan to reach and help as many homeowners as possible. The members of the alliance believe that by working together, they will be more effective than by working independently.

 Joining Klein was Peter Skillern, Margo Geffen, and Margaretta Lin whom individually discussed how vacant and abandon properties impact their communities and described the solutions they have implemented in their regions. 

 Klein opened his remarks by discussing the devastating effects of blight on communities nationwide and steps that must be taken to combat this issue.  Drawing on his extensive experience as the former CEO of Safeguard Properties, Klein emphasized the need for vacant and abandon properties to be fast-tracked through the foreclosure process in order to prevent them from become a burden in their communities.   Klein cited that some states have already implemented laws supporting this process while several others are taking similar legislation under consideration.  Klein noted that implementing this type of law on a statewide scale supports the idea of taking a holistic approach to revitalizing America’s communities.  To support this concept, he pointed to the Slavic Village Recovery Project underway in Cleveland, Ohio. 

Klein described Slavic Village as a blue collar neighborhood, built by immigrants that once was a vibrant community.  Like many communities across the country, Slavic Village was devastated by the national housing crisis and continues to struggle in the aftermath of economic decline. After having the highest rate of foreclosure in the nation in 2007, Klein called rehabilitation efforts futile in the face of hundreds of vacant and abandoned homes.  This led Klein to develop the concept on which the current project is based on. 

Klein described the Slavic Village Recovery Project as a private for profit/non-profit partnership formed to redevelop the historic Slavic Village neighborhood by taking a holistic approach to community revitalization. The first of its kind, this strategic collaboration is a diverse alliance between Forest City Enterprises, RIK Enterprises, Slavic Village Development, and Cleveland Neighborhood Progress. 

Klein’s coalition has partnered with lenders, servicers, and public entities in the area to acquire large numbers of blighted, at risk, or vacant properties concentrated in the target area of Slavic Village. The holistic approach, using both demolition and rehab, is being viewed a case study for the creation of an affordable housing model that can be replicated in communities around the Country.  The project does not use public funds but has support from the City of Cleveland, as well as local stakeholders. 

Brad Dwin, Hope Now Director of Communications offered the organization’s support of the Slavic Village Recovery Project, “Since 2007, HOPE NOW has been instrumental at facilitating partnerships between the mortgage industry, the non-profit community, federal agencies and state level partners, for the benefit of finding viable mortgage solutions for homeowners,” said Dwin.  “Over the past several months, we have noticed a real need to analyze the challenge of abandon properties and bring these same partners to the table to discuss the issue and formulate a thoughtful plan for addressing the issue. We are focused on nurturing public-private partnerships to the fullest in order to meet this goal. HOPE NOW supports all efforts that promote stable communities, and we applaud Robert Klein’s work with Slavic Village.”

 

Americatalyst Conference 2013 "Renting the Future"

Last week I had the chance to join a panel at the Americatalyst Conference.  We had a very productive conversation on community revitalization.  To learn more about the discussion read the summary below. 

You Can Fix a House, but can you fix a neighborhood?

Leading initiatives in neighborhood and community revitalization. 

Participants:

Moderator: Toni Moss, AMERICATALYST LLC

Co-Moderator: Julia Gordon, Director, Housing Finance and Policy, CENTER FOR AMERICAN PROGRESS

Ethan Handelman, Vice President for Policy and Advocacy, NATIONAL HOUSING CONFERENCE     

Robert Klein, Chairman, SAFEGUARD PROPERTIES and Chairman, RIK ENTERPRISES    

Craig Nickerson, President, NATIONAL COMMUNITY STABILIZATION TRUST

Tom Deyo, Vice President, NEIGHBORWORKS AMERICA

 
The initial promise of single-family rental was the large-scale renovation of foreclosed properties to stem the tide of neighborhood decline resulting from the crisis. Institutional investors have, for the most part, focused entirely on individual properties, leaving it to the non-profits to revitalize neighborhoods. The need for community redevelopment is so great that today, non-profits are increasingly partnering with for-profit firms with surprisingly profitable outcomes. This panel discussed some of the more unique opportunities, initiatives, and cutting-edge projects that make a crucial difference in distressed communities around the country.

Craig Nickerson began the discussion by talking about the group of individuals who were hit the hardest by foreclosure crisis and how they continue to be affected.  Low to moderate income families were hit in two waves with subprime mortgages and now do not qualify for loans.  Their only option is to rent  There is a lot of research that says the primary people who want to invest in these neighborhoods are the people who already live there.  Inevitably,  the same residents are opponents of rental markets in these communities. 

Toni Moss built on Craig’s thoughts and asked the panel where can NSP funds be utilized under these circumstances and what is the current status of the $7 billion allocation.  Ethan Handleman responded to this question by addressing the challenges around the use of these  and the associated timelines.  The money had to be spent in a very subsidy intensive way. NSP served as a capacity creator and generated a lot of lessons for non-profits who have become more sophisticated as a result.  What we are seeing now is a real recognition that the work that needs to be done goes well beyond $7 billion dollars.  Robert Klein asserted that NSP did not create a sustainable model for revitalization.  Tom Deyo added that NSP taught us the value of non-profits and brought us to place an emphasis on the history these organizations have in their communities.  It ultimately led us to understand what non-profits are good at and realize the importance of public private partnerships.  Craig Nickerson posed the question to the panel, where do we go from here? What we have today Is a realization that public private collaborations are necessary and we increasingly see these types of partnerships. 

 

To provide a real picture of how of how non-profits and private organizations can work together in this manner, Robert Klein discussed a concept he has developed and is implementing in Cleveland’s Slavic Village. Klein explained that the Slavic Village Recovery project is a private/non-profit partnership coming together to fight blight by rehabilitating a neighborhood where between 23% and 30% of the homes are vacant.  This project is unlike any other because it targets several properties at a time to bring large scale change to a neighborhood.  The holistic approach, using both demolition and rehab, is being viewed a case study for the creation of an affordable housing model that can be replicated in communities around the Country.  The project does not use public funds but has support from the City of Cleveland, as well as local stakeholders.  The goal of the SVRP is to acquire homes at little or no cost from the local land bank and lenders for rehabilitation and resale for a price up to $60,000.  Klein emphasized that one of the most important premises being utilized in the Slavic Village Recovery Project is that the public/private partnership should be operated like a business. 

Craig Nickerson added another perspective and spoke about the role investors can play in community revitalization.  Nickerson explained that there can be misconceptions about who investors really and the perception that these individuals do not have an interest in community stabilization.  Nickerson said that there is a need to change the perception on who these investors are and how they can revive a single-family rental market. Robert Klein responded by explaining that investors would not be successful with a home by home approach in helping to rebuild a community and empathized that a revitalized rental market would require several properties to be rehabilitated.  This approach also discourages the flipping of homes. 

The panel concluded with the participants agreeing that it is necessary to embrace the spirit of collaboration and the idea that not every investor is harmful to a community when reviving a single family rental market.

 

 

Slavic Village Recovery Unveils First Rehabilitated Home

We have a lot of exciting things happening in Slavic Village!

Slavic Village Recovery Unveils First Rehabilitated Home

First of 200 Properties to Undergo Renovation

FOR IMMEDIATE RELEASE

October 2, 2013

Slavic Village Recovery (SVR) has revealed the first home to be rehabilitated in its initial target area this week.  Hosting an open house on Tuesday, September 24, SVR welcomed local residents and interested parties to view its first completed home at 3672 East 54 Street in Slavic Village.  The two-story, two bed-room home that began construction in mid-July received a complete internal renovation and external face lift, including a new furnace, carpeting, cabinetry, and new roof.  SVR expects to sell the home at $56,900, making the monthly mortgage payment approximately $450, including taxes and insurance. 

“This home is living proof that renovated, quality affordable housing can be created in today’s economy,” said Robert Klein, project partner and Founder and Chairman of Safeguard Properties. “With the support of our partners, lenders, elected officials and the local community new residents and first time homebuyers will call Slavic Village home in the immediate future.”   

 

Before 

 

After

 

 

 

This is the first of 200 homes that SVR expects to renovate in the area to support the transformation of Slavic Village.  Interested homebuyers should contact SVR Project Director, Jeff Raig at 216.641.2586 or email JeffR@slavicvillage.org. 

About Slavic Village Recovery

The goal of the Slavic Village Recovery Project is to redevelop the historic Slavic Village neighborhood by taking a holistic approach to community revitalization.  The SVRP is a private/non-profit partnership, initiated in direct response to community blight and housing market needs in Cleveland's Slavic Village neighborhood. The first of its kind, this strategic collaboration is a diverse alliance between Forest City Enterprises, RIK Enterprises, Slavic Village Development, and Neighborhood Progress, Inc., each having decades of experience in their respective fields.  The SVRP aims to steady market volatility, stabilize the larger community and match home-buyers with a stress-free home at a good price.

Like us on Facebook: https://www.facebook.com/SlavicVillageRecoveryProject?ref=br_tf

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Contact:  Holly Stutz, RIK Enterprises, Director of Marketing and Communications.  216.990.8767

 

Fighting Blight

Fighting Blight
Stakeholders Should Word Together

By Robert Klein

There is not a community in America that is immune to the national blight epidemic.  While there is not a silver bullet to cure this devastation, I do believe there are innovative solutions, as well as common sense measures that can be taken to ease the burden on communities, homeowners, and local governments. This takes a multifaceted approach that uses a combination of resources to breathe life back into hard hit communities.  Rehabilitation and fighting blight cannot be done in a silo. It requires bringing stakeholders to the same table and thinking creatively to produce a solution. 

This method is currently being tested at what is called the “ground zero” of the foreclosure crisis in Slavic Village of Cleveland.  Slavic Village is the story of a private-philanthropic partnership coming together to fight blight by rehabilitating a Cleveland neighborhood where between 23% and 30% of the homes are vacant. The focus of the partnership formed between Slavic Village Development, RIK Enterprises and Neighborhood Progress Inc. is to obtain properties from lenders, mortgage servicers, and the local land bank in order to renovate the homes to sell or rent.  This process removes bureaucratic obstacles and also has the ability to bring large scale improvement to a community in a relatively short amount of time. 

In Slavic Village homes beyond repair were identified immediately to support the overall redevelopment.  One of the most important steps in rehabbing a community is identifying what cannot be salvaged. Unfortunately, there are often challenges in getting the demolition process underway as the permit process can be both costly and time consuming.  This proves that greater education is necessary on the need for demolition and its associated benefits. 

While many may consider demolition as a last resort, it is in fact a vital step in a comprehensive approach.  It is impossible to cultivate development and garner interest from investors if homes that cannot be saved are still standing. If the proper steps are not taken to remove a nuisance property then rehabbing efforts are futile.  There are also several benefits in demolition including stabilizing property values and eliminating older homes that contain dangerous substances such asbestos.  Additionally, many of the materials from demolished properties can be recycled. 

Land banks are a great tool in getting rid of nuisance properties.  Centralizing vacant and abandon properties is a highly effective way to fight blight.  Land banks can make the process for starting demolition more efficient and increase the effectiveness of property preservation.  Communities are increasingly considering the possibility of land banks as a way to recover and repurpose vacant properties, and servicers with surplus real estate owned properties are recognizing the value in donating to land banks.

Property preservation is the bottom line in maintaining home values, avoiding extreme rehabbing or demolition and ultimately fighting blight.  I believe one of the best tools at our disposal in this battle is a new innovative product that secures vacant properties, preserves home values, and increases neighborhood safety.  SecureView is an alternative board-up system that is designed to look like traditional windows providing clear views, letting in natural light. This is revolutionary way to secure vacant and abandoned properties without exposing their vacancy. By utilizing SecureView rather than traditional methods for securing homes, both marketability and safety are enhanced. SecureView is the only product that allows first responders to see inside a vacant property in the event of an emergency.

Made from 100% recycled materials, it is virtually unbreakable, which means it has the wherewithal to protect property from intrusion, and reduce the crime and squatting so often associated with plywood and steel board ups.  SecureView can be modified to fit any window, and is quickly and easily installed using a simple but effective compression bolt system. This is truly an effective solution to the issue of blight, increasing a property's value due to improved curb appeal, which in turn helps to stabilize the entire neighborhood.

There may not be a silver bullet in fighting blight but this is a close second. Although the Nation has begun to climb out of an economic recession, this industry will continue to rebuild communities facing the aftermath of a housing crisis. 

If we can recognize our collective resources and take a step back to think outside the box a little, we can help these communities join the rest of America on the road to recovery. 

It is my hope that Slavic Village, the “ground zero” of the foreclosure crisis, will be looked at as a model for rehabilitation rather than a reminder of devastation. 

Published in the June 20013 Edition of HousingWire Focus Magazine

http://magazine.housingwire.com/i/135775/2