Robert Klein began Day two of the third annual Vendor Conference by thanking the contractors for their attendance. The purpose of the Vendor Conference is to reinforce our partnership in order to continue improving and growing; both keys to our clients success.  Robert introduced the Panelists for day two to the audience.

Panelists:
REO Manager Ashraf Ibrahim, HSBC;
Vendor Manager Bridgette Coulman, HSBC;
P&P and REO Manager David Ligammari, M&T;
VP REO Dennis Cook, SPS
Broker Ken Myers, Remax;
 
Safeguard:
COO Alan Jaffa, Safeguard Properties
High Risk Manager Steve Meyer, Safeguard Properties
REO Client Relations Manager Erica Unger, Safeguard Properties

What Makes REO Different from Pre Sale Activities
The expectations for REO properties (results, services, purpose) are different than general property preservation work in pre-sale and conveyance for several reasons:

• Pre-sale assets are maintained to prevent damage and retain value, but only services necessary to protect the property and ensure mitigation of code violations is required.  “Real estate owned” properties need to be sold quickly and serviced at a level that makes the asset marketable and desirable by other homeowners.
• A typical REO property costs our clients approximately $25,000 and $50,000 in losses from post sale to eventual private individual sale.  These losses mount every day that the property is not sold so timely sale is of utmost importance.  
• Interaction is different with pre-sale properties because the servicer owns the property outright and an added layer of broker involvement exists. Contractors are encouraged to develop positive, open relationships with the brokers, as their expectations and approval must be met and received in order for a property to be placed on the market and effectively sold.

Communication
Communication is essential to ensure the needs of the servicer and the broker are met to properly market a property. Contractors are required to call brokers after the rekey and trashout have been performed so he or she can access the property to:

• Complete the Broker’s Price Opinion and list the property, and  
• prevent the broker from attempting to enter the property when it isn’t safe.

Contractors should use cell and office numbers and email to try and establish contact with brokers. Working together and sharing information is a training issue, as brokers were previously solely responsible for performing services at an REO property.
 
Safeguard is working to improve our relationship with the broker through methods like the Broker Sign Off Sheet that allows brokers to note their satisfaction level with services provided and to record when they received notification of the completed rekey and trashout. Contractors are encouraged to do all work right the first time, but to be proactive in addressing any issues the broker may have. The sign-off sheet also protects the contractor from being held responsible for any future issues that are not a result of their performance. Clients strongly encourage use of the sign-off sheets, and HSBC advised they will not give listings to a broker unless the sheet is filled out regularly. They also reported improved positive interaction and feedback from the increased use of the Broker Sign-Off Sheets in the last six months.
 
The sign-in sheets are not to be duct-taped or nailed to the wall, but stored in a folder left on the counter. This will also prevent potential buyers from viewing a broker’s rating of the property condition, which may dissuade them from sale. Entries need to be printed and legible. Contractors can provide photos of the sign-in sheets if the broker is not visiting the property enough.

The Broker Direct line is available for brokers with property or contractor issues and can be reached at 800-852-8306 ext. 2296. Clients and Safeguard have pushed the hotline to brokers to speed resolution and ensure the broker is satisfied, which helps to satisfy the clients.

Communication is needed to address code enforcement issues because we rely on the contractors and brokers to alert Safeguard and the client when an issue exists at the property. An open, informative relationship is the key to speeding timelines and reducing costs when handling REO properties.

Contractors’ communication with Safeguard is very important because we need photos, the sign-off sheet and confirmation that work has been completed correctly. Safeguard should be advised if updates are delayed or issues exist at a property. Contractors should advise Safeguard when second bids will be needed for the trashout. Safeguard staff should be available to field calls past regular business hours until at least 8 p.m. If contact cannot be made, the issue should be called in the next day and escalated for immediate attention.

REO Services Timeline
At Day 0, the foreclosure sale is complete and the property is REO. The client has 12 days to get the property on the market, unless in a redemption/ratification/confirmation state. In these states, the securing can be completed once the property is vacant, but no other items should be removed. At Day 1, the client orders the initial services order, and between Days 2-3, the property must be secured and winterized within 24-48 hours and notification provided to the broker for the appraisal to be scheduled. By Day 5, the trashout must be completed. If a contractor is approached by a mortgagor during the performance of any services and advised the foreclosure is not yet complete, all work should be stopped immediately and Safeguard should be notified.

Initial Services – Securing and Winterization
Safeguard standards are to complete a secure and winterization (when in season) within 48 hours of the order. Safeguard’s year-to-date average to secure is 1.87 days and 5.99 days to complete the trashout. We understand delays will exist in some situations, but we need to be updated when to expect this so we can notify the client. Safeguard understands there is room to improve the communications between our REO departments and the contractors, but we are focused on addressing issues and trying to create resolution when able.

REO orders are placed as they are received, so contractors may receive orders in the morning based on downloads and more individual orders throughout the day. Safeguard understands orders placed later in the day will usually not be sent to crews until the next day. Safeguard is also working to develop programming that will monitor and identify when contractors are in the area of the new order so they can be expedited to a crew already in the field.
 
Contractors are strongly encouraged to implement their own internal quality control processes to review photos and updates and personally review work completed.
 
Lockboxes
Safeguard began using a new lockbox prototype at the beginning of the year and it is being replaced after multiple problems reported by contractors and brokers. The current box dropped the latch when the code was entered, and also had a button in the back to change the code. The new lockbox type has buttons inside that allow users to open the shackle and change the code. Brokers were instructed how to operate the current lockboxes, but the training process will continue until the new lockboxes are implemented.

Boarding
Hairline fracture cracks in window glass are to be boarded when they allow access to the property by the elements or outside parties. Cracks that do not need to be repaired should be included on the update, but with no bid submitted. Outbuildings and garages should be secured. When in doubt, provide bids and await direction from Safeguard or the client.
 
Winterizations
Safeguard needs accurate documentation to show water is not coming out of the lines, and all procedures were done correctly. Winterization stickers should be posted at each property, in addition to tags on fixtures, but both should be done neatly. Contractors should advise Safeguard if a broker has an issue with either of these items.

Most winterized properties have the heat off, especially in high-risk neighborhoods with increased risk of a break-in or squatters. Safeguard works with clients to identify high-end properties based on their portfolios and preferences; however, if contractors feel a property is labeled high-end in error, contact Safeguard.
 
Sump Pumps
To best show sump pumps are on and operable, pour water into the drain and photograph, and then show the water getting lower as the sump pump operates. All debris should be removed from the drain area.
 
The broker is responsible for maintaining the utilities to keep the sump pump running, but the contractor should use a generator to show the sump pump is operable. Contractors should notify Safeguard when a sump pump is installed in a property with no utilities, as this is a high-risk condition that must be addressed.
 
Initial Services: Trashouts and Maid Services
Trashouts
Safeguard requests multiple, detailed before and after photos from the same angle during trashouts. Stained carpet, wood, and debris should all be removed.

Maid Services
These services impact property appearance and increase its marketability. Contractors are to follow the maid services checklist included in the work order and leave it at the property signed by the person who completed the services. This is a requirement when completing the initial services order.
 
Contractors advised that bleach and household cleaners can be used to rid a property of a smell, along with a powder scent put down on the carpet before vacuuming. Contractors are to bring a hot water supply with them to perform the cleaning. If carpet is in deplorable condition, the contractor should notify Safeguard to have it removed. Shockwave, a deodorizer and mold inhibitor by EMS, and scented antifreeze, can also improve property quality.
 
Bidding and Ongoing Maintenance
Repair Bids
Repair bids will be needed at some properties to put them in marketable condition. Main issues reviewed by the servicer include the average return of investment reasonably expected from the repair, the property value, and the broker’s recommendation. Repair bids are revenue sources for our contractors but increase costs for clients.  We must provide competitive and reasonable bids.. If a contractor is unsure about competitive pricing for a repair bid, Safeguard suggested talking to the broker, as they have industry experience on general pricing and what should all be included in a repair. Clients have a relationship with the broker and listen to them, and will usually follow their advice regarding bids and their scope of work. Most servicers prefer the bid be broken down into line items to clearly show how the money is being spent, where, and on what quality of materials. Bids lumped together with no detail provide the client no information to determine if a bid should be completed or not. In addition, clients understand conditions or issues may exist that are unforeseen and lead to additional costs, but this information must be communicated. It is a win-win situation for Safeguard and the contractors to submit bids that meet the brokers’ suggestions at competitive prices that include all needed aspects of work.

Safeguard is working with clients to accompany them on property visits and determine what clients’ expectations are for repair bids and what is acceptable so this information can be relayed back to the contractors.

Ongoing Maintenance
Lawn maintenance, interior inspections, maid services, and snow removal are ongoing services performed at REO properties. Grass cuts for REO properties should include edging, trimming and shaping bushes and shrubs, and trimming along the fence lines. The property should be maintained in a manner to meet community standards. Photos must be provided from the same angle of the property before, during, and after shots and clippings must be removed. Grass cuts are not profitable for Safeguard or the contractors individually, but overall they are necessary for curb appeal and attracting buyers. Large lot pricing can be negotiated with Safeguard’s regional coordinators if it is a reoccurring order. If a grass cut is done correctly during the initial services, it will be easier to maintain until the property is sold.

Snow removal orders will be placed individually, as they depend on snow falling, and cannot be monitored by a consistent list (like grass cuts). Brokers will place orders when the property is closing, having an inspection completed, or being shown to a potential buyer.
 
Interior Inspections
Approximately 90% of damages are interior, and if they are identified and addressed proactively, the value of a property will be protected and preserved. Every time a contractor visits a property, an interior condition report is to be provided. Safeguard implemented a new process of inspecting properties during the grass cut to confirm interior condition. Safeguard is planning to implement a change to ensure continued interior inspections once grass cut season ends.

Conclusion
The intent of the conference is not to discourage or criticize contractors and their performance; they are doing a great job. We have come a long way with improving services and we continue to improve. We are also focused on continually strengthening the relationship among the broker, contractor, and Safeguard. This is a critical relationship and provides us with a tremendous opportunity to increase our service quality and profits. The objective of the 2-day session was to continue to better our training, communication, and processes both internally and with contractors.