The Mortgage Bankers Association recently conducted the 2007 National Mortgage Servicing Conference and Expo in San Diego, CA.

Following is the summary of the Vacant Blight Session prepared by Senior Director with MBA, Vicki Vidal

Code Enforcement/Servicer Communications
MBA Default Working Group
February 20, 2007

Attendance:
Deb Oakley, National City,
Sherilee Massier, Wells Fargo
Terry Ross, Barrett Burke
Steve Morrison, Wells Fargo
Kellie Beyer, Safeguard Properties
Jim Satterwhite, Chase Home Finanace
Jolene Stevens, Charter Bank
Maude Huffmire, Charter Bank
Robert Klein, Safeguard Properties
Jill Rein, Pierce and Associates
Doug Licker, MCS
Steven Kator, MCS
Peter Lopipero, Acquisitions Manager, Private Party Capital LLC
George Schwartz, Countrywide

Goal:  Improve communications between code enforcement officials and mortgage servicing staff to resolve problem property issues

1. Creation of Servicing P&P Personnel Contact List; House on MBA Website; Distribution The discussion began with recognition that code enforcement personnel do not have a centralized location for information.  Servicers conversely can turn to MBA.  It was reported that Joe Schilling,Director of Research and Policy for the National Vacant Properties Campaign, is willing to help coordinate city code enforcement personnel in our mutual efforts.  Robert Klein has compiled 3,000 names of code enforcement people that lenders can use if necessary and will distribute to the servicer P&P contact list.   

The group discussed the work group projects. First, is to create a MBA website page listing servicer contact information for the benefit of code enforcement personnel.  The information would list the servicer’s property preservation contact info and company names under which the company operates.  The list would also provide the servicer’s website address specific to property preservation information.   Robert Klein and Deb Oakley suggested that servicers avoid listing individuals and their phone numbers, but develop an ACD group number to avoid updating when employees leave.  Deb Oakley stated that she has developed such a list.  The list was passed around at the meeting for the attendees to review.   George Schwartz stated that he will provide the appropriate contact for Countrywide; Jim Satterwhite stated he is the right person, Sherilee Massier, stated she is the right person.

Deb Oakley stated it was difficult to identify the servicer when a private label investor is listed on the mortgage.  

2. Creation of a “Problem Property Website The second project for the work group to explore MBA hosting a website where code enforcement can post “problem” properties on a website.  “Problem properties” would be those where the servicer cannot be identified. There was discussion on the ability to team the website with the MERS website.  MERS has a website where the servicer can be identified by inputting the property address. Vicki Vidal stated that this web feature does not seem to be up to date and that several MBA staff tested it and either got “no information” or old mortgagee information.  MERS’s search feature, however, does not list the servicer contact information.  MBA can fill this gap with the list Deb Oakley is developing.  There is some concern that even if MERS provides the servicer’s name, it may not drill down to whether it is the mortgage company or the trust. The information on MERS must be specific.  

Jim Satterwhite is concerned with the concept of creating a “problem property” list because the servicer becomes a research department for the local code enforcement personnel.  The states are going to dump 3,000 properties on servicers to figure out whether there are serviced by them or not.  The other concern expressed is that listing properties on a website becomes “legal notice”.   Jim Satterwhite objected to the creation of a website that lists problem properties, but supports listing P&P personnel on MBA’s website.  Steve Morrison also did not see value in creating a “problem property” website.  

Deb Oakley stated that when a city can address major problems, such as drug activity at abandoned properties, they tend to leave the servicer alone and do not nit pick.  Once you develop a relationship with the city, you avoid adverse publicity.  Oakley stated that she finds it helpful when she gets calls from code enforcement and that National City acts immediately.   

Robert Klein indicated that there was a two hour discussion on property conditions at the Conference of Mayors Meeting and that the city of Baltimore owns 6000 properties that is costing the city money.  Cities are always talking about the financial burden being placed on the city as a result of abandoned properties.  Yet according to Klein, $82 million was spent on P&P work and $34 million was spent on property inspections by servicers for Safeguard clients alone in the first 10 months of last year.  The group felt it would be beneficial to share this data with the Conference of Mayors and others.  

Oakley also suggested that servicers develop escalated contacts for code enforcement. One vendor indicated that calls go to high risk team that contact the servicer.

3.  Logistics for Rolling Out the Projects

Logistics were discussed on how to roll out the two projects:   1) list of servicer P&P contacts and 2) “problem property” website.  

Deb Oakley stated that the  “problem property” website must be password protected because you don’t want to give thieves a list of abandoned properties.   

Vicki Vidal explained that if MBA develops the website, MBA would require “click through” disclaimer pages that would required the locality to agree that posting the property is not legal notice and that review of the website by lenders is strictly voluntary.  Deb Oakley also suggested it would be necessary to have the right format and expiration dates on property listings (or some standard for how long a property would remain on the website).   

Robert Klein said there are 60 cities that have a list of problem  properties, Chicago and LA are the most common ones.  MBA could offer these links on its website.  

Safeguard and other vendors indicated that they are already looking at these websites on behalf of their clients. One lender recognized that in some cases the “problem properties” may not be in the hands of the vendor, yet. Thus the vendor looking at these websites doesn’t solve the whole problem.  Another participant also indicated that there could be problems in the way the property address is loaded on the website.  Differences in data format could result in the failure to match information on the city websites and the servicing system  (e.g. blvd vs boulevard).  Deb Oakley stated that MBA’s website would serve as a tool kit for servicers, but servicers need not use all the information provided.   

Deb Oakley continued by stating there is misinformation about what servicers can do.  She met with Cleveland Housing Court Judge Ray Pianka, who has been very vocal about property conditions and his frustration with the inability to reach the servicer.  National City met with Pianka and provided examples of the amount of money they spend on properties (in particular one case where repairs cost over $50K to  bring up to code, when the property was only worth $50K).     

Sherilee Massier suggested servicers set up a generic email address for city code enforcement, such as  “Code violations@wells.com”.  Steve Morrison agreed.

4.  Other Issues

Deb Oakley raised the issue of donating properties.  She stated that Judge Pianka asked about servicer willingness to donate properties in specific zip codes.  Citigroup and Wells also get these requests.  Deb Oakley recommended creating a land bank. Doug Licker agreed to raise the list creation objective with his clients.  He indicated that he would contact some of the servicing managers individually.  Licker stated that he can locate 5th 3rd Bank, who was targeted by Judge Pianka.  Chuck Mannis, is the servicing head. 

There was general belief that the industry should educate policy makers on the fact that servicers are administrators and that investors call the shots.  We should also promulgate statistics on the amount of money servicers spend maintaining properties. City officials generally focus on security, protection and property appearance so as not to bringing down property values.  Deb Oakley believes the industry should engage more often with city officials.  NC has an association of code enforcement people where MBA can possibly put some facts about the servicing industry on their website.  The U.S. Conference of Mayors is another venue.

Jill Rein suggested that law offices need to maintain good contacts and relations with city officials because if the city can’t find the servicer they will call the law firm conducting the foreclosure.   When you have good relationship with the court and code enforcement they will let you know when problems occur on a property.  

Deb Oakley stated that Judge Pianka was going to post the names of the mortgage companies on abandoned properties.  She also stated that Pianka drives through the neighborhoods to see where there are abandoned properties.  Deb met with Judge Pianka and educated him on what servicers can and can’t do.  Pianka was arguing that servicers are  mortgagees in possession once the servicer secured the property.  National City lawyers disagreed and Pianka actually dropped the issue and dropping the notion of posting of National City’s name on abandoned properties.  Pianka’s biggest issue is knowing who to talk to. 

Robert Klein stated that Pianka is taking this to a new level.   He is issuing warrants against mortgage company Presidents when there is no corrective action on code and property violations.  5th 3rd Bank got a warrant and their President got hauled into court. Oakley also suggested providing the correct address on MBA’s website for where copies of legal notices and violations should be sent to servicers.  Steve Morrison supported this recommendation because now the cities would have a responsibility to send information to the right place and not blindly send to any address.   Action Items:  With the help of Robert Klein and Deb Oakley, MBA will obtain confirmation that the contact information on Deb Oakley’s list that provides servicers’ property preservation contact information is acceptable to the company. Companies should also list the names they operate or operated under.

MBA will also inform servicers that the information they agree to post will be located on MBA’s Resource page.  The information will not be password protected, but rather visible to anyone viewing MBA’s website.