City of Los Angeles Role of a Field Servicer Summary

November 11th, 2010

On October 7th, Robert Klein, founder and chairman of Safeguard Properties, gave a presentation to more than 220 Los Angeles housing department representatives in Los Angeles, California.

Overview
More than 220 City of Los Angeles Housing Department representatives, who are tasked with addressing the maintenance issues for multi-unit properties, therefore primarily focusing on tenant occupied structures, convened in Los Angeles on October 7 for a presentation by  Safeguard Properties Founder and Chairman Robert Klein. The presentation shared the active role that the mortgage servicing industry is taking to both maintain vacant properties and foster solid partnerships with members of the code enforcement community.
 
The audience consisted of department chiefs, inspectors, and key administrative staff. The number of attendees who dedicated their time for the presentation and open dialogue clearly demonstrated the Housing Department’s commitment to expand the long-standing partnership with Safeguard and further collaborate to explore and achieve viable solutions to the impacts of the current foreclosure crisis.

Attendees
Safeguard Properties
Robert Klein
Michael Halpern
 
City of Los Angeles
Domingo Sauceda
Mel Plummer
Daniel Snyder
Scott McGill
Tim Hess
Housing Department Personnel

 Safeguard’s Role in the Industry
Safeguard diligently maintains and protects vacant and abandoned properties across the nation and on behalf of mortgage servicers, both during and following the foreclosure process.  While the loan is in delinquency, Safeguard performs monthly visual inspections to confirm the property's occupancy status.  A door hanger is left for the borrower instructing them to contact their servicer to discuss their loan.  This is an example of the commitment and efforts by servicers to keep borrowers in their homes.
 
Following each inspection, the occupancy status and exterior condition are reported directly to the servicer, who will use that information to determine a course of action that is in accordance with the industry’s best practices and protects the condition and value of their collateral interest.

Pre-Sale vs. Post-Sale Activities
Robert offered differentiation between--and a clarification of--the roles, responsibilities, and actions that can be taken by servicers during the pre- and post-foreclosure stages.  Once a delinquent property is determined to be vacant, it is properly secured without denying access by the borrower.  At that time, routine yard maintenance and monthly interior inspections to prevent costly damages commence.  Roughly 20% of properties become vacant prior to foreclosure.  A servicer’s legal authority is limited until a foreclosure sale has been finalized.  This can be problematic in jurisdictions with lengthy foreclosure timeframes, however, as servicers have and exercise the right to protect their collateral interest, thereby ensuring that code violations and health or safety issues can be addressed during the pre-sale stage. 

Departmental Issues, MERS®, Direct Points of Contact
Since the structures addressed by the Housing Department are multi-family and typically occupied by tenants, officials reported that show extreme cooperation in identifying violations and providing the details regarding the recipient of rental payments.  Those violations not brought to the attention of the department by a tenant are discovered during an inspection, which is conducted on a three-year cycle.
 
The Los Angeles officials identified mold, tall grass and threats to safety (primarily pools) among the leading issues being addressed by inspectors.  Difficulty and frustration with locating the person or entity responsible for the property was further noted.  Assistance was requested for this task.  Robert indicated that the Safeguard Web site provides a list of servicers and their contact information.  Although it is a current practice to automatically issue a citation at the time of discovering the violation, Robert invited the officers to first contact Safeguard to obtain a direct point of contact, which will expedite the resolution of the matter.
 
Another effective tool for obtaining contact information for property preservation is the Mortgage Electronic Registration System (MERS®).  Michael Halpern, Safeguard's director of community initiatives, shared an in-depth demonstration of the system, highlighting its many capabilities and the overall ease of navigating the electronic platform.  Suggestions and options regarding how to search and locate property details were provided.  Subscription to MERS®  is free for municipalities and access has been provided to over 600 cities across the nation, many of which report utilizing the system on a daily basis.  Although information is currently only available for 1-3 unit properties, Robert will work with MERS® to suggest and confirm future upgrades and expansions to the scope of the system.
 
Finally, Safeguard is reviewing the creation of a national database that will draw property information from a variety of sources and allow cities to directly enter the code violations for a specific property.  This information will then be immediately sent to the servicer and brought to the attention of the appropriate contact, thereby drastically improving the rate and speed of compliance.