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.
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.
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.
