IACE Code Enforcement Summit

July 8th, 2010

Robert Klein and other field service executives recently presented to the Illinois Association of Code Enforcement.

On July 7th, LPS hosted a conference for the Illinois Association of Code Enforcement. Over 130 municipal code enforcement and building department officials gathered for Quarterly Code Enforcement Summit. The panelists for the Summit were representatives of the industry's field service companies, LPS, CoreLogic, Field Asset Services, MCS and Safeguard. Representing Safeguard Properties was its Founder and Chairman, Robert Klein.
 
The audience, comprised of small and midsize communities in Illinois were active participants in the conversations. For many this was their first true insight into the field service and servicing industries. Questions posed, were similar with those heard throughout the country at outreach events and clearly demonstrated the value of continued outreach and education to municipal officials. The discussions and interactive dialogue allowed for a comprehensive overview of the aforementioned industries.
 
The primary theme throughout the session was the common goals shared by servicers and municipal officials in protecting properties and communities and the value of open dialogue between all parties. Additional key topics discussed at length include: 

• Communication - Many benefits of open communication were discussed throughout the sessions however the primary benefit for all was how proper communication can drastically decrease the need for the issuance of violations and the ensuing liens, that benefits neither party. Municipal officials throughout the country that have developed and maintain these communication channels have experienced tremendous success and allowed them to focus their limited resources on other areas.
• Pre-sale industry best practices. A clear distinction was provided between actions servicers can legally take prior to foreclosure sale versus post-sale. Robert stressed that servicers are legally limited on actions servicers may take while the loan is in a pre-sale delinquency status. Servicers undertake these actions utilizing the clause in the mortgage deed allowing for the protection of its collateral interests. It was noted that these rights are aligned with the interest of code enforcement to ensure properties remain safe and secure.
• Occupied properties and determination of occupancy. Communities increasingly are faced with occupied properties where the occupant, often a delinquent borrower or a tenant does not complete basic upkeep (i.e. grass cuts). Regardless of loan status, the servicer has no legal right to take any action on occupied properties.
  Field service company's inspectors utilize several methods to determine occupancy including a complete exterior visual inspection and door knock. When discrepancies arise and a code enforcement officials believes the property is vacant they were encouraged to reach out to the field service companies for resolution. This was highlighted as an example of how cooperation can result in a mutually beneficial outcome. 
• Investor/Insurer guidelines - Industry procedures have evolved greatly over the last several years due to ongoing dialogue between all facets of the industry. Recently released HUD guidance further streamlines the entire process and is expected to expedite preservation actions. 
• Notifications to Code Enforcement - Field Service companies are bound by contractual agreements and borrower protections pertaining to privacy, not to release borrower/property information to outside parties.
  Industry best practices do provide code enforcement officials with notification. These include:  
• Vacancy sticker clearly placed on the front door providing a toll-free number
• Safeguard Properties' procedure to apply an acknowledgement sticker on posted violations with contact information.  Additionally, Safeguard's Good Neighbor Program received positive support from audience members as a method of reducing frustration to concerned neighbors and resulting in fewer incoming complaints to the municipal offices.
• Bankruptcy - Servicers actively review each property individually to ensure the borrowers bankruptcy's protections are adhered to and that all efforts are made to best maintain the condition of the property. Bankruptcy while often causing significant delays in the entire process offers an opportunity for code enforcement to work collaboratively with the servicing industry to ensure properties do not deteriorate.
• MERS Initiative - Over the last several years a proliferation of vacant property registration (VPR) ordinances have occurred throughout the country. Servicer compliance with the multitude of ordinances and their variances has been near impossible . Through industry conference calls spearheaded by the Mortgage Bankers Association VPR Committee chaired by Robert Klein a viable "win-win solution" emerged - the MERS Initiative. Robert provided a thorough overview of the MERS Initiative and how the database has become a vital resource for communities in addressing their overwhelmingly primary concern - identifying proper points of contacts at loan servicers and their respective field service companies. Additional discussion was had on how communities throughout the country are incorporating the MERS Initiative into their ordinances, most recently being Los Angeles.
• Approximately 25% of the audience had prior access to the MERS system but some were experiencing difficulties in retrieving property information. Mark Roberge (MERS)  was on hand and provided a tutorial on proper searching techniques. The audience voiced support for the initiative with those with prior access stating successful resolution in many instances. They welcomed the tips provided by Mark and offered unique suggestions for future enhancements.
• Legislation - Positive legislation has recently been enacted including in the State of Colorado where  HB 10-1249 (Fast Tracking) takes effect in August and is expected to reduce the timeframes significantly allowing vacant and abandoned properties to move through the system quickly.
• REO Maintenance - The servicing industry is increasingly dividing the responsibilities for REO properties between Brokers (Marketing) and Field Service Companies (Maintenance). In these cases brokers and field service companies work cooperatively for their mutual clients. As several servicers still assign all functions to brokers, audience members were encouraged to continue to utilize all available points of contacts (field service companies and brokers/listing agents) when issues arise. 
• Swimming Pools - Swimming pools are of primary concern to the servicing industry. Panelists stressed that extra efforts are taken to minimize the potential liability of unsecured pools. Additionally, investor and insurer guidelines provide strong guidance to the servicing industry.
• Sump Pumps - Safeguard Properties considers any property with a sump pump as "high risk" due to the obvious proclivity for potential flooding. Electricity is maintained in these instances to ensure the sump pump is active. On all subsequent visits, inspectors are required to test the sump pump for continued operability.
• REO Properties - With the current status of the housing market, REO servicers are re-evaluating their marketing procedures. Servicers are increasingly evaluating property improvements to ensure REO properties remain competitive with non REO on the market - often on the same block.   
• Grass Cuts - During the pre-sale status, grass is cut bi-weekly during season. When a property becomes REO extra efforts are exerted to ensure comparability with the other homes in the neighborhood, this often includes mulching and landscaping.
• Building permits - Servicers comply with local requirements pertaining to permits. For actions where a building permit is required, field service companies submit notification to the servicer who authorizes the additional fees to ensure compliance.

 About Safeguard
Safeguard Properties is the largest privately held field services company in the country. Located in Cleveland, Ohio and founded in 1990 by Robert Klein, Safeguard has grown from a regional preservation company with a few employees and a handful of contractors performing services in the Midwest, to a national company with approximiately 800 employees. Safeguard is supported by a nationwide network of subcontractors able to perform any requested superintendence, preservation, and maintenance functions, as well as numerous ancillary services in the U.S., the Virgin Islands, and Puerto Rico.