These forums are designed to explore the current state of communities experiencing significant foreclosures by exploring best practices, creative solutions, and building a framework for innovation for how communities are recovering, rebuilding and preparing for the future.

On July 15-16, investors, servicers and community development professionals gathered in Los Angeles for the second symposium titled, Mitigating the Negative Impact of Foreclosures.

For information regarding the first symposium in the series please click on the following link Re-Engineering the Real Estate Market.

The opening plenary session featured presentations from Kim Rueben, The Urban Institute, Frank S. Alexander, Emory Law School, Andrew Jakobovics, Center for American Progress and Heidi Coppola, Citibank. Presenters discussed : 

• The difficulties facing communities as they address the foreclosure crisis 
• How the following factors will contribute to the crisis enduring for the foreseeable future: tightened credit, decrease in home prices, geographic clustering of foreclosed properties, volume of affected homeowners and spillover effects to other areas of the economy
• The history of the RTC and what lessons can be learned 
• Challenges and opportunities that exist in the foreclosure process.

Heidi Coppola discussed efforts by CitiBank to enhance its REO disposition methods. CitiBank continues to brainstorm and test initiatives where it collaborates with non-profits and/or local governments to efficiently return REO assets to productive use. Citibank has increased internal communication including convening regular interdepartmental meetings between the Default Servicing, Community Development and Government Relations Departments .

Citibank’s goal is to utilize partnerships or relationships in devising innovative methods to sell the REO assets expeditiously, preferably to owner occupants. At all times Citibank balances the business side with the philanthropic side. While challenges exists, including when the lender makes a business decision not to proceed with the foreclosure action while retaining the lien, there exists numerous opportunities. With potential purchasers fearful of proceeding in the current environment and limited funding available, non-profits were encouraged to work on pre-qualifying purchasers and providing pre-purchase counseling prior to encouraging these individuals to purchase a REO. Citibank is working with several non-profits who have a pool of pre-qualified buyers ready for immediate purchase.

A subsequent session was titled The Servicer/Investor Perspective. Panelists discussed their internal structures and procedures for working with governments and nonprofits to dispose of REO properties, as well as pilot initiatives they are undertaking in cites across the country. Panelists included;

• Joan Dallis, HSBC who reviewed HSBC’s YourHomeCounts REO Disposition Pilot Program that commenced in Chicago, Buffalo and Tampa. HSBC is currently investigating other geographic areas where HSBC has a footprint to expand the program, potentially utilizing the gifting of REO properties to receive CRA credit. (click here)
• Tammy L. Missone, U.S. Department of Housing and Urban Development reviewed HUD REO Disposition methods and the various innovative programs available i.e. Dollar Home Program, Asset Control Areas  (click here)  
• Zeeda Daniele, Fannie Mae reviewed Fannie Mae’s loss mitigation efforts to avoid increases in REO inventory. Fannie Mae has avoided bulk sales and attempts to work with local entities to return the REO assets to owner occupants. 
• David Sunlin discussed Bank of America’s REO disposition strategy. Following 120 days on the market additional avenues are considered including auctions. While lenders can appreciate the frustration by outsiders to the crisis and industry practices, lenders have fiduciary responsibilities to investors that they are required to abide by. Bank of America continues to reach out to code enforcement  officials to address their concerns while utilizing or evaluating  new methods to ensure safety (motion sensors) and quality (3rd party inspections of brokers maintaining the property). In response to comments pertaining borrowers inability to receive an adequate response when seeking a workout, David stressed the need to be persistent. The servicers that are in the business for the right reasons should listen to borrowers.

One of the final sessions was titled Community Preservation: Strategies for Addressing Vacant Properties and featured Peter Lemos, City of Stockton CA, Doug Leeper, City of Chula Vista, Raymond Eshaghian Raymond Realty Group and Sherilee Massier, Wells Fargo.
 
Peter and Doug provided insight on how City governments address vacant and abandoned properties in their communities with varied budgetary restraints. Peter reviewed his department’s efforts to identify and communicate with the appropriate servicer. Stockton is considering a vacant property registration ordinance to assist with this effort (see attached).

Sherilee provided the audience with a review of current industry practices of preserving their collateral interests from onset of delinquency through final disposition. The servicing industry performs millions of inspections a month on delinquent loans and performs general maintainence (grass cuts, winterizations, debris removal) to ensure the property is safe and secure and is not a blight on the neighborhood. The primary investors (HUD, VA, Fannie Mae and Freddie Mac) have pre-determined guidelines that include pre-approved authorization for various property preservation actions. Many servicers will proactively instruct their field service vendor to perform work outside of pre-approved actions, prior to confirmation of reimbursement from the investor if an immediate hazard is present i.e. unsecured swimming pool.

Robert Klein, CEO Safeguard Properties discussed efforts by the servicing industry to open lines of communication with municipalities and local community groups. Cities where open lines of communication have been established has resulted in tremendous benefits for all parties.Cities were urged to take into consideration when drafting (registration) ordinances current industry practices, mutual goals (safety and security of the property) and limitations (pre-sale).

For information about the final two symposiums please click on the following links :
Columbus August 27

St Louis Sept 24-25

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 over 500 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.