/ a concentrated look at industry issues
property
preservation
inside:
M&M III REO Maintenance Field Services
plus more
focus special edition of housingwire magazine / 2010
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p r o p e r t y p r e s e r vat i o n / s e p t. 2 0 1 0 /
w w w. h w fo c u s . c o m
Perspectives Insight and opinion from some of the country’s leading property preservation experts
7 // HUD M&M III HUD has a new way to manage and market distressed properties. With FHA REO inventories on the rise, the rules will impact every aspect of the industry.
1 0 // MARK VELAZQUEZ
3 4 // a region at risk The oil spill in the Gulf of Mexico devastated beaches and wildlife. Some say it could also drop home values by $3 billion in five years.
A listing of field services and preservation service providers.
There are dangers when it comes to preserving REO properties, problems that aren’t the former owner’s fault. Those issues are mounting and they’re creating a strain on the property preservation industry.
+
EDITOR’S NOTE // 2 common property preservation issues // 5
2 7 // greg tolander 2 9 // tara williams 3 0 // mike carroll 3 1 // brice bishop 3 2 // te leone 3 3 // joseph miranda 3 5 // barry sando 3 6 // dawn marie o’connor
parting shot // 4 4
ad index
1 4 // JERRY ROWELL
1 6 // cheryl lang
1 8 // Risky Business
8 // Brittania
1 3 // DERRICK LOGAN
1 5 // JILLIAN CRAWFORD
3 8 // the valuation directory
1 1 // Alan Jaffa
1 2 // msi
b c // Core logic
4 3 // national real Estate field services, inc.
4 // Cyprexx Services
3 7 // energy REO
3 // Field asset services
1 7 // five brothers default management solutions
6 // national field network
4 1 // north american property preservation corp, LLC 1 5 // PACIFIC PRESERVATION Services i B C /// SAFEGUARD PROPERTIES
i f C // lps
3 1 // SPECTRUM FIELD SERVICES
3 3 // mortgage contracting services
2 8 // THE BOSTON GROUP
HW FoCUS // propert y preservation
1
editor’s note
Focus on preservation Here we are, our third edition of HW Focus, the supplement series of HousingWire magazine. This time, we explore the property preservation industry, and it couldn’t come a better time. Earlier this year, the Department of Housing and Urban Development (HUD) released the latest incarnation of its Management and Marketing (M&M) rules, known as M&M III. It is a revolutionary new approach to how real estate owned (REO) properties that back Federal Housing Administration (FHA) mortgages are maintained, marketed and ultimately sold. The new rules empower the property preservation industry to be proactive in its efforts, allowing more leeway to contractors who are performing maintenance and repairs on distressed properties. As you’ll read, HUD’s REO inventory numbers more than 44,000 properties, with an additional 180,000 additional properties somewhere in the foreclosure process. With that growing number, the impact of these new rules is great. These new guidelines present a great opportunity for well-run property preservation companies to excel in maintaining FHA REO, but it also holds the industry more responsible for its actions. This edition also covers the Environmental Protection Agency’s (EPA’s) new regulations for remodeling work on properties that may contain leadbased paint. It’s a controversial topic that’s got renovators pitted against government regulators. We also cover the impact that defective Chinesemanufactured drywall used to build properties during the housing boom presents so much added expense to remediate, that servicers are sometimes willing to forgive a borrower’s mortgage debt and walk away from their claim on the property. From cover to cover, as always, we bring you the best in industry commentary with our “Perspectives” articles. Industry experts provided their thoughts on a number of topics that matter most to the property preservation space. To round out the publication, we’ve brought back the Directory section that was included in our inaugural valuations edition. There you’ll find a sample listing of property preservation firms in the country, and the services they offer. When you get to the end, don’t forget to check out our “Parting Shot” on the back page. Since we launched HW Focus earlier this year, we wanted to create a publication that would dig deep into a subject and provide insight found nowhere else. We’ve strived to do that again with this edition, and we hope you agree.
Jacob Gaffney, Editor
volume 1, issue 3 september 2010
editorial PUBLISHER & editor in chief Paul Jackson ASSOCIATE PUBLISHER Richard Bitner EDITOR Jacob Gaffney associate editor Austin Kilgore staff writer Jon Prior
Creative executive creative director Greg Lakloufi ART DIRECTOR Polly d’Avignon Brand Manager Kelly Yorek senior account director Cory Davies director of interactive services Jason Clemens WEB producer Rizwan Javaid Digital developer Ron Ferguson designers Rosangel de Moreira, Jessica Fung
the ltv group ADVERTISING Christi Lingard clingard@theLTVgroup.com
Lauren Border lborder@ theLTVgroup.com SUBSCRIPTIONS & REPRINTS Matthew Hardisty mhardisty@theLTVgroup.com
about HW Focus is published by The LTV Group, 2701 Dallas Parkway, Suite 200, Plano, TX 75093; 469.893.1497 The information contained within should not be construed as a recommendation for any course of action regarding legal, financial or accounting matters. All written materials are disseminated with the understanding that the publisher is not engaged in rendering legal advice or other professional services. The LTV Group does not guarantee the accuracy of information provided, and is not liable for any damages, losses, or other detriment that may result from the use of these materials.
© 2010 by The LTV Group • All rights reserved
2
HW FoCUS // propert y preservation
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Structural Electrical Heating Plumbing Roofing Flooring Carpentry Windows/doors Interior & Exterior Painting Replacement of Appliances
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A property preservation company is more than just a home remodeler. When a company gets a listing, employees never know what’s waiting for them on that first visit. The issues companies face range from security concerns and local code enforcement compliance to aesthetic items that will make or break the timely sale of an REO property.
Common
Property Preservation
Issues
Bath
Interior
• Fixtures • Tile • Cabinets • Plumbing • Lighting
• Trash • Carpet • Doors • Paint • Abandoned or dead animals
Kitchen
Security
• Appliances • Plumbing • Cabinetry • Flooring • Water heater • Laundry space
• Locks • Doors • Windows • Pest abatement • Winterization • Fences • Code Enforcement Compliance
Exterior • Paint • Siding • Brickwork • Trash • Landscaping • Broken windows • Swimming pools • Fences • Air conditioning unit
Structural • Foundation • Drywall • Brickwork
• Plumbing • Wiring
HW FoCUS // propert y preservation
5
When it comes to the dirty details of property preservation, elbow grease beats lip service every time. When was the last time your Property Preservation provider lowered your cost per property, reduced your risk, and kept you in compliance? At National Field Network you get an experienced team of experts not only in the preservation field, but also in FHA Claims filing and Investor/Insurer guidelines. So let us be the experts in this time sensitive, complex piece of the business. So while other vendors are holding their noses and talking a big game, we’re down in the trenches taking care of the messy but vital details of Property Preservation. It’s not just what we do, it’s what we do better. We provide all the traditional Property Preservation services –– and some unique ones too: • FNMA Compliant Borrower Outreach • HUD Mailer Program • Itemized Billing for FHA Claims
• HUD-50002 Request to Exceed Cost forms completed • Municipality Violations expedited • Vacant property registration
www.nationalfieldnetwork.com | 732.276.5563
D U H M III M&
By Jon Prior
The government is changing the way you’ll sell its REO When Alysia Hutchison gave a training seminar for those wanting to sell REO properties held by the U.S. Department of Urban Development (HUD), she would start with a question.
“When I say HUD, what do you think of?” The room would go silent. “Okay,” she would say, “I give you permission to get real.” And it would start in the back, just a whisper. Someone would say, “dirty.” And it would build across the room. “Low-end housing,” “Not for a homebuyer,” “Section 8.” Finally, Hutchison would hold a hand up. “No,” she said. “Let’s talk about what a HUD home really is. First and foremost, it’s a lot of opportunity.” And she would spend most the seminar dispelling a myth that government property, formerly insured by the Federal Housing Administration (FHA), is all lowend housing. On the contrary, Hutchison says, a lot of them are in great condition. She’s based in Atlanta now as an REO consultant. In her area, there is a great selection of HUD foreclosures, she says. But people either love HUD or they hate it. Either way, the amount of REO property currently in the HUD inventory is up to 44,000 properties. HUD usually holds between 35,000 to 40,000. And the number could be growing. According to a report from the Office of Thrift Supervision and the Office of the Comptroller of the Currency, there were 83,947 government-backed mortgages moving through the foreclosure process, about 1.9 percent of the total.
In the first quarter of 2010, that number had grown to 179,948 properties. That’s 3.1 percent of all government-backed mortgages. Meaning, the inventory of these properties moving through the foreclosure pipeline has increased 114 percent in one year. To deal with these, on June 14, HUD awarded 55 new contracts to 23 asset management firms and 32 field service managers. This third generation of the Management & Marketing (M&M) program has brought more competition among the companies than ever before. According to the HUD announcement in June, the new contracts are intended to reduce further risk to HUD, increase sale prices and accelerate the pace of reselling its inventory of foreclosed FHA homes. HUD is hoping to do this by creating more competition and specialization. M&M III splits each region in half based on responsibilities of the contractors. HW FoCUS // propert y preservation
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Previously, companies were picked to be both the field servicer and asset manager, but the new awards bifurcate the roles. The previous M&M contracts, which were first awarded in 1999, set up a system of one asset management company assigned exclusively for the marketing and management of each HUD property in a given territory. Before the latest version of M&M, one company was in charge of every single aspect of the HUD sales process from property preservation, appraisals, listings, marketing and closing. HUD split the responsibilities of asset management and field services in M&M III to allow companies to concentrate resources in one area of REO, an attempt to solve the subcontracting problem. “In every step of the game, they had to be a specialist in HUD REO. It limited the pool somewhat because it’s hard for a company to be a specialist in everything, unless they subcontract out for certain aspects. For instance, they can contract out to a property preservation company,” Hutchison said. But that had setbacks, too. The subcontracted companies would have subcontractors who had subcontractors. It came to a point that the person at the bottom of that pile simply didn’t have the same incentive to provide a level of service HUD was expecting from the companies it chose. But it’s different now.
Boosting Competition
The new process fuses competition into the mix. Take a look at the list. The state of Michigan alone has four different contracts out to field service managers and three for asset managers, a change from the past, where that market was dominated by one HUD contractor. Today, whoever has the most success at dispelling those myths about HUD properties, sells them the quickest and adheres to the process the best will get the lion’s share of the properties to market. “There are a lot of steps for most companies to be involved, and I think with this kind of process and this new phase of marketing and management for HUD, it’s going to open the door for a lot more companies to get into HUD. There’s a ton of new companies this go around,” Hutchison says. First Preston Management, one of the field service management companies, received contracts to provide services in 11 states across the Midwest and in some foreclosure hotspots like Arizona and Nevada. First Preston was founded in 1988 and has managed and sold more than 400,000 properties since then. Nancy Richards, the company’s founder, and Lisa Barrentine, the president of First Preston, were selected by Ernst & Young for the “National Entrepeneur of the Year Award” in 2005. To satisfy the contract with HUD, First Preston will use its pool of 7,000 local subcontrac-
tors that provide property management and maintenance services. Barrentine says the company has a history of working for locally owned businesses, and it could be the reason HUD prefers them to handle its REO. “We look forward to working with HUD and local communities to manage homes in a manner that maintains their value and preserves the value of neighborhoods,” she says. “We have never forgotten our small business roots and are seeking qualified vendors that share our commitment to quality and community outreach.” Pacific Engineering Management Co. (PEMCO) was also awarded contracts, totaling five in 26 states. They’ve handled HUD properties for more than 10 years as an asset management firm based in Hawaii. But this is the largest territory share for PEMCO yet. In their announcement of M&M III contracts, they said the 45,000 HUD properties equals a total value of about $4 billion. As part of the stipulation of the contracts, each contractor must establish an office within each geographic area. HUD says the awards will create 1,200 new jobs across the country. According to HUD, the going to increase the effectiveness of the program, will reduce risk, increase sale prices, and “accelerate the pace of reselling HUD’s inventory of foreclosed FHA homes.” Opening The Broker Pipeline
But what does all this mean for brokers? Hutchison said there is plenty of opportunity for REO brokers to be involved with HUD home sales. “HUD’s sales process is an open sales process, meaning any agent with an agent license in that state can sell a HUD home, collect the commission and all they have to do is register with HUD as a brokerage,” Hutchison says. “That’s one of the best things. It’s not like the bank REOs where you’re either in or you’re out.” The trick is understanding the process. HUD is the government, meaning if they say to sign contracts in blue ink, you sign them in blue ink, otherwise they get sent back. It’s a joke, but any slip-up, however small in the bureaucratic assembly line will lock a broker or a contractor out of “the largest seller of residential real estate in the world,” according to PEMCO. But for those who master it, the process could be a great opportunity for the entire REO industry. “The process really opens the doors and infuses accountability into the mix for asset managers to not just be complacent with their positions and really strive to be better,” Hutchison says.
Government Contractors Area 1P (Michigan) FSM Contractors: Asset Management Specialists, A-Sons Construction, IEI-Tidewater and SIGMA Construction AM Contractors: BLB Resources and Cityside/HHN Area 2P (DC, DE, MD, OH, PA, VA, WV) FSM Contractors: A2Z Field Services, Cityside Management and Innotion Enterprises AM Contractors: HomeTelos, Matt Martin Real Estate and Ofori Area 3P (CT, MA, ME, NH, NJ, NY, RI, VT) FSM Contractors: Asset Management Specialists, A-Sons Construction and Cooper-CitiWest AM Contractors: Cityside/HHN and Ofori Area 1A (IL, IN, KY, NC, SC, TN) FSM Contractors: A2Z Field Services, Asset Management Specialists, Cityside Management, Cooper-CitiWest and Innotion Enterprises AM Contractors: HomeTelos, Ofori and PEMCO Area 2A (AL, FL, GA, MS, PR, VI) FSM Contractors: Cityside Management, CooperCitiWest, CWIS LLC, Innotion Enterprises and PK Management Group AM Contractors: HomeTelos, Ofori and PEMCO Area 1D (CO, NM, No. TX, UT) FSM Contractors: Asset Management Specialists and SIGMA Construction AM Contractors: HomeTelos, Matt Martin Real Estate and PEMCO Area 2D (AR, KS, LA, MO, OK, So. TX) FSM Contractors: A2Z Field Services, Asset Management Specialists and Cityside Management AM Contractors: HomeTelos, Matt Martin Real Estate and PEMCO Area 3D (IA, MN, MT, ND, NE, SD, WY, WI) FSM Contractors: Asset Management Specialists and First Preston AM Contractor: BestAssets Area 1S (AZ, ID, NV) FSM Contractors: First Preston and SIGMA Construction AM Contractor: BLB Resources Area 2S (AK, CA, HI, OR, WA)
(HI includes Guam, Northern Mariana Islands and American Samoa)
FSM Contractors: Asset Management Specialists and Cityside Management AM Contractors: BLB Resources and PEMCO More information may be found at the Federal Business Opportunities website at www.fbo.gov.
HW FoCUS // propert y preservation
9
PERSPECTIVE Mark Velazquez
Vice Pre sident CoreLogic Field Service s
Field services in the new market: Keep it simple and consistent Be careful what you wish for. That’s an expression that many of us in the field services industry are just beginning to truly understand. As we enter into the fourth year of the mortgage crisis, the demand for competent field service companies — at both the national and regional levels — has never been greater. This year, more than 1.2 million homes will go into pre-foreclosure, foreclosure and possibly become real estate owned (REO) properties. And the waves just keep coming: recently Standard & Poor’s estimated that it may take at least three years to work through all the visible and shadow inventory that is estimated to be overhanging the market. But sheer scale of the problem, the growing concern over the cost and quality of property preservation and the continuing disappointment over revenue leakage in remarketed properties have resulted in increased criticism of our industry, new regulations and new risks, including repurchase risks. None of this should come as a surprise. Any market that sees a huge surge in volume will inevitably attract less-qualified, less-scrupulous players, and their performance — or lack thereof — will hurt the image of an industry. Further, anytime an industry garners headlines about contractors charging $300 to mow a lawn and endless pictures of vandalized, vacant homes, there will be cries for increased regulation. Thankfully, industry leaders recognize that there are quality vendors in the market and appreciate the expertise, capabilities and resources that a large, well-run and well-financed partner can bring to the table. And now that servicers are increasingly being asked to repurchase properties for field service-related problems, there is a renewed interest in ensuring that the companies they partner with have the professionalism, expertise and financial wherewithal to perform to higher standards and stand behind their work. We continually strive to focus our employees and contractors on the core elements of field services: inspection, protection, preservation and maintenance. We believe that the message from field service professionals should be simple and consistent: know what you’re supposed to do, do it right the first time and convey a property that preserves its value. New rules, not necessarily bad On July 13, 2010, the Department of Housing and Urban Development (HUD) came out with a new mort10 HW FoCUS // propert y preservation
“Any market that sees a huge surge in volume will inevitably attract less-qualified, lessscrupulous players, and their performance — or lack thereof — will hurt the image of an industry.” gage letter covering pre-foreclosure and foreclosure work for Federal Housing Administration (FHA) loans. Shortly thereafter, Fannie Mae adopted some of these same guidelines. As with anything that requires someone to change the way they’re accustomed to working, certainly some field service companies found the new rules threatening. For the most part, the new rules are reasonable and most encouragingly, they acknowledge that there may be multiple solutions to every situation. Rather than micromanaging every situation, the new rules provide broader guidelines. The solutions would have to continue to be cost-effective and meet local regulations, but the new rules focus on the end-benefit rather than the means to get there. For example, gone is the old diagram explaining how to board up a swimming pool. What replaced it instead is a simple directive that pools should be boarded up to prevent drownings and vandalism. This is a similar approach to what a number of larger servicers have been doing recently: instead of trying to handle every aspect of property preservation, they are now asking their field service partner for recommendations and solutions. So, while the challenges, scrutiny and risks all continue to loom large, there is greater standardization, thanks to the new rules, and a greater alignment with clients. What more could our industry ask for?
PERSPECTIVE Alan Jaffa
C EO S a f e gu a r d P r o p e r t i e s
New HUD guidelines streamline conveyance process Earlier this year, HUD introduced its new management and marketing mortgagee compliance process, called M&M III, and updated property preservation and cost reimbursement procedures. M&M III centralized HUD’s mortgage compliance process under a single national mortgagee compliance manager (MCM) and separated the asset management and property preservation functions to minimize conflicts of interest. HUD also introduced its P260 Internet portal to reduce paperwork for pre- and post-conveyance activities. The new guidelines took effect July 13, 2010. While some details are yet to be clarified, the overall intent of M&M III is clear — to streamline the conveyance process and save time, money and resources. From a field services perspective, the updates with the potential to deliver the greatest efficiencies are the increases in the Property Preservation allowance and over-allowable threshold, and the elimination of the second bid requirement for removal of debris and hazardous materials. HUD increased the property preservation allowable expense maximum $2,500. This is especially helpful in states with long foreclosure processes, where expenses for basic maintenance such as grass cuts and winterizations can easily exceed the maximum while the property awaits foreclosure. Likewise, the over-allowable threshold has increased to $1,500. Both increases should greatly reduce the number of bid submissions. With these changes, HUD is authorizing servicers to proceed with work that is reasonably necessary to protect and maintain properties and obtain bid approval for items that fall outside the norm. This empowers field service contractors to apply more professional judgment in the field and document their rationale.
Another significant update eliminates the second bid requirement to remove debris and hazardous materials. In lieu of the second bid, HUD is utilizing a bidcost-estimator program, widely used in the insurance industry, which provides real-time, unbiased cost calculations. Bids are submitted to the MCM, which inputs information into the estimator. Bids comparable to the estimator are approved. Only variances require additional follow up. In addition to reducing conveyance times by one to two weeks, eliminating the second bid promises to save HUD millions of dollars in interest and other holding costs. Other issues still need clarification. One is the reintroduction of requirements to remove interior debris prior to conveyance. Servicers are discussing the best approach to minimize risk around the removal of personal property prior to the foreclosure sale. The absence of specific language around some requirements also presents a challenge. At the same time, it creates an opportunity to test a “document and go” approach, which may prove valuable in refining the guidelines in the future. Overall, the new M&M III guidelines are a major advancement to enable servicers to convey foreclosed properties efficiently within the 30-day timeframe. HUD worked with the Mortgage Bankers Association (MBA) and other industry groups to gather data and understand their issues and challenges. The new guidelines were developed in response to and in collaboration with the industry. HUD’s intent was to reduce conveyance times and the cost and resource burden on servicers, with the ultimate goal of returning foreclosed properties to ownership as quickly as possible. For this reason alone, the new M&M III guidelines deserve our earnest support.
“It creates an opportunity to test a ‘document and go’ approach, which may prove valuable in refining the guidelines in the future.” HW FoCUS // propert y preservation
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PERSPECTIVE Derrick Logan
Ex e cu t i v e D i r e c t o r REO A l l e g i a n c e
The changing face of property preservation Although the traditional real estate broker model has served its purpose well, the present foreclosure climate has certainly changed how the industry must do business today. The need for uniformity and increased timeline management is never more evident in managing balance sheets of REO departments across America. Time is money and the ability to manage time effectively requires retraining the thought process of how things get done. National preservation companies have joined this process by studying what is currently being implemented and providing solutions that round out the process. They accomplish this by employing an all inclusive team solution that is effective and nonthreatening to the traditional broker model. Brokers everywhere are embracing preservation companies as a welcome enhancement to the process, resulting in increased sales, faster turnaround and shared accountability. Their willingness to accept help is never more evident as it is today. In the past, the broker was able to manage properties on a smaller scale. This option has changed as inventory has ballooned to unmanageable proportions and broker income has leveled off. Brokers understand that they get paid nothing until they sell something and enhancing property management performance levels can only benefit them in the long run. For the broker, accounting issues are being revealed as increased revenue outlay is required to finance the cost of property preservation prior to bank reimbursement. In addition, the local field contractors are requesting receivables to be paid faster due to current economic conditions. Furthermore, staffing cost and the need for modern technology and system upgrades become costly issues for brokers and the local contractor involved in REO management today. As demand increases so does the ability to maintain timelines decreases. National preservation companies are fully focused on preservation and financially prepared to meet such timelines. Teams of professionals do this by simply watching the clock and monitoring the contractors with a combination of enhanced technology that alerts and reports. Contractor accountability and management processes allow the REO broker to concentrate fully on the marketing process, such as obtaining property comparison pricing, creating a property marketing plan, advertising and the overall selling process. Cost control for the broker model across the board is not easy to predict. The uniformity just does not exist nationwide. The cost of property preservation differs
“Contractor accountability and management processes allow the REO broker to concentrate fully on the marketing process, such as obtaining property comparison pricing, creating a property marketing plan, advertising and the overall selling process.� from one broker to the next on a local level and the bidding process can erase weeks of marketing time. Every day that is lost is a day never regained. In a declining market, the cost of holding a property out of the marketplace is a recipe for loss. Preservation companies control the cost by eliminating the bidding process with single fee maintenance solutions and pre-determined cost allowances that make sense for the current REO environment. These options will allow for a faster and more efficient way to get REO properties on the market today. In addition, the reduction of administration cost is the silent way of returning to profitability. Every day a property is held in portfolio is another day that will cost you. Minimizing these costs is essential in maximizing profits or controlling losses. Clear, concise invoicing will reduce cost by stabilizing the accounting process and minimizing unnecessary paperwork. A single invoice for every property will put less strain on the brokers, outsourcers and the servicer, resulting in less administrative cost per property. The need for financial institutions to utilize property preservation companies to fill these voids in the process has resulted in a more streamlined way of doing business that eases the broker’s financial burden and simply must not be ignored as a viable option for future REO department success. HW FoCUS // propert y preservation
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PERSPECTIVE Jerry Rowell
Managing Director, Field Service s L e n d e r P r o c e ss i n g S e r v i c e s
New HUD mortgagee letter impacts the property preservation chain As of July 13, 2010, the Federal Housing Administration’s (FHA’s) Mortgagee Letter 2010-18 went into effect; with the aim of mitigating the negative impact vacant homes can have on communities nationwide. The new directives present mortgage servicers, field services companies and contractors with significant new challenges. In an ideal world, Department of Housing and Urban Development (HUD)-owned properties would be in a condition at conveyance that could facilitate the quick marketing and sale of the properties to an FHA-approved buyer. However, the prior policy of conveying properties to HUD with debris and possible damages left some properties on the market for long periods of time in less than enviable conditions, increasing urban blight and dragging down property values throughout communities. The implementation of ML 2010-18 should help bridge the prior gap in property condition at conveyance. Properties must now be placed in “broom-swept” condition, meaning that all debris has been removed, minimizing the risk of unrecognized damages at the time of conveyance. This should facilitate the resale of the property to an FHA buyer, thus reducing the risk to communities. However this comes at a cost to the servicing industry by pushing additional expectations and responsibilities down to the servicer and their group of providers, inclusive of field services companies and their network of contractors. Prior to the new Mortgagee Letter, HUD supplied the servicers with specific allowances for routine maintenance. Any items over those allowances were submitted to HUD for approval prior to work completion. Any work completed within the allowable — or substantiated by a
bid approval — was reimbursed when the claim was filed. The new requirements still outline some line item allowables but specify that no bids should be submitted until the servicer has expended the established property cap in the pursuit of broom-swept condition. This puts a significantly increased level of responsibility on both servicers and property preservation contractors. They must now make informed, but subjective, decisions about what and how much to spend upfront with the expectation of being reimbursed. Servicers with FHA portfolios of any size need to make prudent decisions on the preparation of properties to be conveyed with an eye toward risk mitigation. Spend too much without proper justification and risk not being reimbursed or spend too little and run the risk of a reconveyance. Field services companies and contractors have to realize that every dollar spent must be justified or HUD may charge back the awmounts. Lack of proper supporting documentation for financial decisions made by the servicer could result in denial of reimbursement from HUD when the claim is paid. Everyone involved in the property preservation chain needs to be establishing a rock solid audit trail of information, photos and documented justification as to why money was spent to achieve this broom-swept standard. In summary, the new directives are a solid attempt to be responsive to issues communities are facing in terms of both urban blight and the facilitation of selling HUD owned properties, and they should be applauded. However, it is important to recognize that this effort comes hand in hand with new responsibilities for service providers with a good deal of ambiguity around how it may work in practice.
“Spend too much without proper justification and risk not being reimbursed or spend too little and run the risk of a reconveyance.” 14 HW FoCUS // propert y preservation
PERSPECTIVE Jillian Crawford
M a r k e t i n g Ex e cu t i v e E n e r g y REO S o l u t i o n s
With growing foreclosure waves, tides shift in condition of REO properties The rise of REO properties has created plenty of abandoned, vacant homes, which has generated many new challenges in the real estate market. As we recognize the significant problems being dealt with everyday, we should ask ourselves: “How can we manage these critical issues so the REO properties can preserve their value and stay marketable?” A considerable issue that has been seen in the last five years is homeowner struggles with preforeclosure and eviction, which causes many of the homes to be left in poor and unmarketable conditions. The disgruntled homeowners are not looking to save the bank any money, so as they leave the home, the heat or air conditioning, and sometimes water, are all left on, or sometimes off, creating heat loss, air conditioning cooling loss and massive problems if the property freezes over. The freeze damage can cause mold growth, broken pipes, damaged fixtures, walls and ceilings, as well as heat and air conditioning and plumbing issues. Many of these things end up in the landfills, when it should and could have been avoided. This unfortunate setback has a huge impact on the environment, but can be resolved by following simple procedures and by mak-
ing sure they are done correctly and in a timely fashion. Some simple solutions include coordinating a trash out to make sure appropriate items are donated to charities or local shelters so they aren’t wasted, and taking advantage of county recycling programs so old appliances, paint and pesticides don’t get dumped into the landfills. Many counties take these items free of charge or for a small fee. It’s also important to make sure household hazardous wastes (cleaners, paint cans, etc.) are properly disposed. As property preservation is conducted in a fast-paced, ever-changing industry, it is imperative that companies value the environment, and do everything possible to keeping it safe for future generations. Energy REO Solutions has continually driven its internal goals of positively affecting client success, as well as putting into effect new goals of addressing ecological success. ERS begins the outbound strategy of managing environmental needs by appropriately selecting contractors, and training them to handle all preservation work correctly, including chemical usage and disposal, recycling where possible, and making sure our contractors are on the lookout for stains, vegetation, unusual odors, etc. The partnerships ERS has formed with their contractors are extremely beneficial; creating a mutual win-win relationship that has positive effects on pricing, timelines and quality.
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PERSPECTIVE Cheryl Lang
P r e s i d e n t a n d C EO I n t e g r at e d M o r t g a g e S o l u t i o n s
A day at the office Though the economy in general is showing glimmers of recovery, consumers continue to struggle as evidenced by recent foreclosure statistics. Paul Krugman, professor of economics and international affairs at Princeton University recently warned of a “third depression,” that has the potential to affect the global economies with widespread unemployment. Whatever the future holds for us, one thing we do know is the statistics are a strong indicator that REO homes will continue to flood the marketplace at unprecedented levels. Every day, lenders and servicers rely on property preservation management specialists and providers to be the guardians of their assets. They are the first line of defense against further loss and deterioration of the asset. Though there has been a great deal of emphasis placed on technology and positive strides made in managing REO assets, a key component to success is still the performance and professionalism of the people in the field. The integral role these companies and individuals play in asset preservation has changed dramatically with the increase in homeowners’ now experiencing foreclosure. The “feet on the ground” have expanded to meet the growing demand as a result of the housing crisis. Many of the newcomers into the field have been personally affected by the crisis. Increasingly, contractors who were out of work have found preserving foreclosed homes segue to their original building profession. Stabilizing neighborhoods and preventing the decay of REO assets has triggered growth opportunities for smaller field services companies, who can easily expand to meet the rising demand. Additionally, firefighters and off-duty police officers have found opportunities to earn extra income by inspecting and preserving vacant properties on a part time basis. The field representatives have also embraced a “lighter touch” when direct contact is made with a delinquent or foreclosed borrower. The financial crisis has shown us time and time again that bad things do happen to good people. “As I drive around performing inspections, signs of desperation appear on the front lawns of many who were considered to be doing very well financially,” said William Corbett, owner of Port St. Lucie, Fla.-based Express Field Reps. “This only brings to mind that no one is safe from this national crisis we are in, and as we perform our duties as field agents, we will come across 16 HW FoCUS // propert y preservation
many troubled people. Our company recognizes this and trains our field agents on how to maintain a calm and courteous attitude while approaching borrowers.” Hazardous situations faced by field services personnel have become more prevalent, as noted by Brian Butcher of Rancho Cordova, Calif.-based Butcher and Associates. “Here in the Sacramento and Stockton area we have to be mindful of vagrants when doing our interior inspections,” said Butcher. “This situation leads to very unsafe working conditions, so we utilize only our most seasoned staff members for these assignments.” In more metropolitan areas, field service specialists have reported incidences of properties requiring repeated securing and boarding as they fall victim to drug-related crimes. It has become progressively more difficult to determine if a property is vacant. When delinquent borrowers fall into a state of denial, block out the progression of the foreclosure process and fail to plan for a financial disaster, panic sets in when it is time to leave. Many homeowners are waiting until the last moment to move out, leaving personal items normally associated with occupancy visible. In some cases, neighbors will come over and mow the lawn and clean up the exterior so that their property values are not affected by the blight of an abandoned property. As the shadow inventory increases and homes are left to deteriorate as a result of deferred maintenance, field representatives, real estate agents, and neighbors are finding more physical danger looming in these abandoned properties. Hundreds of municipalities across the nation are passing laws that require the registration of vacant properties and many times, a local field representative be assigned as the “go-to” person when a dangerous situation presents itself and needs correction. Revenge has become the behavior of choice by some frustrated borrowers who feel the system and their lender have let them down. Prior to our present financial crisis, the unfortunate homeowners who went through foreclosure though not as prevalent would generally leave the home in habitable condition. Over the past three of four years, former homeowners leave homes filled with junk, stripping out all appliances such as plumbing, fixtures, wiring and cabinetry off the walls. There is a great deal of anger and frustration vented at lenders/servicers and those affiliated with the foreclosure process by these unfortunate persons.
“Revenge has become the behavior of choice by some frustrated borrowers who feel the system and their lender have let them down.” Lost and Found Despite the heart-wrenching and sometimes shocking conditions faced by property inspection and preservation specialists, they do occasionally encounter something so special they know the former owner would not have ever left it behind if at all possible. For example, many inspectors and preservation specialists take in the animals they find left behind by homeowners who have abandoned their home and pets. When these field service professionals cannot possibly take in another pet, they find alternatives to local animal shelters, such as No Paws Left Behind, to assist in rescuing these forgotten victims of foreclosure. One bittersweet story of a foreclosure turned “happy ending” experience began when Deni and Steve Herckt, owners of Ramona, Calif.-based H.M.S., a foreclosure inspection and preservation company, found a long, lost
treasure. In late 2009, as they were performing a trash-out of a home in Chula Vista, they came across a shadow box filled with medals, ribbons, awards and insignias of U.S. Army pilot and Chief Warrant Officer Gregory Beck. After months of trying to locate the family of the fallen soldier, the Herckt’s took the shadow box to the Ramona Veterans of Foreign Wars (VFW) post. The VFW post engaged the services of a genealogy specialist and located the son of CWO Beck, who was living in the Midwest. The shadow box had been stolen during a home invasion robbery in 2005 and was never expected to seen again. A local frame shop donated services to the VFW who shipped the fully restored shadow-box to Gregory Beck Jr., who was only two when his father died, and grateful to have this memento back. If it were not for the extraordinary efforts of the Herckt’s, this story would have had a very different conclusion.
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8/4/10 11:12 AM
Chinese drywall and lead paint pose danger to REO preservation By Austin Kilgore
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Taking stock of the nation’s REO inventory is a mixed bag. Disgruntled borrowers, irate over losing their homes, take their frustrations out on the property, leaving untold damages behind. The more gruntled may not intentionally damage their properties, but for homeowners struggling to make mortgage payments, routine maintenance is a low priority. By the time those homeowners are out of the house, there’s a lot of work that has to go into getting an REO property ready for sale. The horror stories about REO property conditions are the stuff of legend. For the real estate brokers and agents working in this specialized segment of the real estate market, sharing these stories is a form of cathartic bonding. And aside from market expertise and knowledge, great REO horror stories are what separate veteran REO brokers and agents from the rookies. But there are other dangers when it comes to preserving REO properties, problems that aren’t the former owner’s fault. Those issues are mounting and they’re creating a strain on the property preservation industry. Drywall that emits sulfur gas has some servicers willing to walk away completely from the mortgage, while new rules from the U.S. Environmental Protection Agency (EPA) dictate how companies remediate lead-based paint. Together, these issues are significantly impacting how REO properties are disposed.
Made in China, Ruining the South It’s hard to believe these days, but it wasn’t but five years ago that the United States was in the midst of a home building boom. From Maine to California, and virtually everywhere in between, builders were putting up houses as fast as they could. The demand for building materials strained domestic supplies, and in order to fill the void, builders turned to imported drywall, primarily from China. Save for an occasional “Made in China” stamp, this drywall appeared to be like any other. After all, drywall is a fairly simple product. Plaster made from the mineral gypsum is pressed between two thick sheets of paper before it’s dried and hardened in a kiln. Unlike many products imported from China, this drywall was actually more expensive than its domestic counterpart, due in large part to the expense of shipping the product overseas. But developers, in their frenzy to build, coughed up the extra money to buy the drywall. Compounding the issue was a series of hurricanes in 2004 and 2005 that caused millions of dollars of damage to the housing stock in the Southeast. The most notorious of these are, of course, Hurricanes Katrina and Rita in 2005, which caused a combined $91 billion in damages. But the 2004 hurricanes Charley, Frances, Ivan and Jeanne also caused nearly $50 billion in total damages. In the wake of those storms, builders went back to work,
renovating and rebuilding properties damaged or destroyed by the storms. An extensive investigative report published in a February 2009 edition of the Sarasota Herald Tribune found that, all told, at least 550 million pounds of Chinese drywall have come into the United States since 2006. The report projects that much drywall is enough to build 60,000 average-size houses. Port cities in Florida, Louisiana and Virginia took shipload after shipload of drywall, storing it in warehouses before it was used either by itself, or mixed in with domestic drywall, to build houses across the Southeast. Experts believe it’s likely hundreds of thousands of homes built in the mid-2000s have at least some Chinese-made drywall. Aside from a mortgage and credit crisis that sent foreclosures skyrocketing and property values plummeting, there were few concerns about the housing stock in the Southeast — after all, much of it had just been built, these were virtually brand new homes getting foreclosed. But in 2009, homeowners in the Southeast started complaining about a noxious sulfur smell in their homes. They said sulfur gas was causing damage to heating, ventilation and air conditioning (HVAC) components, including corrosion of copper pipes and wiring, as well as health problems ranging from watery
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eyes to respiratory issues. The gas was eventually determined to be emitting from the imported drywall used to build their properties. As the complaints mounted, the Consumer Product Safety Commission (CPSC) launched a multi-agency task force to study the problem. As of July 27, 2010, the CPSC received 3,482 incident reports related to drywall from 37 states, the District of Columbia, Puerto Rico, and American Samoa. More than 90 percent of reports are from five states — Florida (58 percent), Louisiana (19 percent), Mississippi (6 percent), Alabama (5 percent) and Virginia (4 percent). While Alabama (35th), Louisiana (38th) and Mississippi (45th) rank among the lowest states in RealtyTrac’s rankings of foreclosure rates in the first half of 2010; the online foreclosure marketplace ranks Virginia 18th. Then, of course, there’s Florida, the state with the third highest foreclosure rate in RealtyTrac’s rankings. The sunshine state had 277,073 properties with foreclosure filings from January 1 to June 30, 2010. That’s about one in every 32 housing units, or 3.15 percent of the state’s homes. It’s bad enough that servicers are trying to deal with mounting foreclosures, an overflow of REO inventory and the rising trend of strategic default. But add to that the concern that properties with one of the county’s
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leading foreclosure states is now being hit with another problem — defective homes — and servicers and preservation companies are anxious. “From an REO preservation standpoint, we haven’t seen Chinese drywall in as many of the REO properties in the pools we manage as I suspect we will encounter once we start to move through some of foreclosure bubbles that exist in the market today,” Tara Williams, who works in Houston as vice president of field services for Altisource Portfolio Solutions. Altisource is a former subsidiary of Ocwen Financial Corp. and is now its own international corporation based in Luxembourg, with U.S. headquarters outside Atlanta. It’s not just the damage the defective drywall causes that’s got the industry concerned. According to the CPSC, the only effective remediation solution is to strip a property down to the frame studs, replace any damaged wiring or pipes, as well as the drywall. The general consensus among industry observers is that each house with defective drywall will cost $80,000 to $100,000 on average to repair, but it can grow much higher in some cases. “I’ve seen several cases of homeowners invested two to three times their property’s value just to make repairs,” Williams said. Determining who’s going to foot the bill for remediation is a point of contention. Homeowners look to
their insurance carrier or homebuilder to fix the problem. But, as many homeowners have found, insurance carriers are declining claims on the basis that policies provide coverage for perils that cause damage to houses — like wind, fire and hail — and exclude others — like floods and earthquakes — according to the Insurance Information Institute (III), a New York City-based nonprofit funded by the insurance industry that serves as a spokesperson for the industry and its goals. “From the homeowners insurers’ perspective, what they’re saying is: ‘If I have a defective car, I don’t file a claim with the auto insurance company, I go back to the showroom and they go back to the manufacturer,’” said Michael Barry, III vice president of media relations. “It’s more complicated here obviously, because we’re talking about these Chinese manufacturers where it’s not easy to recoup the losses.” When homeowners come up short with their insurer, they next turn to the company that built their home — if it’s still in business — to fix the problem. “The builders want to help [homeowners] through this process, but while builders are not victims, they feel victimized,” said David Jaffe, vice president of legal affairs at the National Association of Home Builders (NAHB), a Washington, D.C.-based trade group representing homebuilders and renovation companies. “They were not aware that the drywall was problematic, and in many respects, didn’t find out about it until reading about it or when homeowners contacted them to complain about the symptoms in their homes,” Jaffe added. “We’re doing the best we can on behalf of our members to help work through this.” Builders are trying to recoup the cost of remediation from their own business insurance carriers or from the manufacturers of the drywall. Barry said the business insurer segment of the industry is paying more Chinese drywall claims than any other type of insurer. But getting the Chinese companies to pay for repairs, let alone show up in U.S. courts when they’re sued, is next to impossible. In April 2010, a U.S. District Court judge ruled against Taishan Gypsum Co., a Chinese-based drywall manufacturer, awarding more than $2.6 million to sev-
en families whose homes were built with allegedly defective products produced by the company. In the fall of 2009, Fitch Ratings analysts warned that drywall manufacturers based in China will likely ignore lawsuits filed against them in U.S. court, as civil judgments in American courts are not enforced in China. Despite the gloomy outlook, Baron & Budd, the Dallas-based law firm that participated in representing plaintiffs in the Taishan case, said with the ruling, it will pursue all options to enforce the judgment. A massive court case is ongoing in Louisiana, and the issue has blown up into an international diplomatic crisis. Trying to hold these foreign companies accountable “certainly complicates matters and that’s part of the reason you have U.S. senators getting involved in this and it’s really become an international thing,” Barry said. “You have U.S. Sen. Bill Nelson [D-Fla.] asking the president to bring this up a couple months ago when he was in China; you have both the senators in Louisiana being proactive in this. I would say it’s certainly factored into the pricing equation for a commercial insurer.” As politicians look to score points with constituents by seeking mortgage forbearances for homeowners dealing with the drywall in their homes, the government’s two biggest wards, mortgage giants Fannie Mae and Freddie Mac, find themselves in a position to oblige. In June, the government-sponsored enterprises (GSEs) each issued guidance to servicers, encouraging them to use power authorized under “unusual hardship” policies to provide forbearances of six months in the case of Fannie and three months in the case of Freddie Mac. In addition, Freddie is allowing servicers to reduce payments for up to six months for borrowers. Longer terms can be granted on a case-by-case basis at the servicers’ request. The Veterans Administration (VA) is also encouraging servicers to offer six-month forbearances for its borrowers dealing with drywall issues. In addition, the Department of Housing and Urban Development (HUD) is asking lenders to work with Federal Housing Administration (FHA)-backed mortgage borrowers who have the drywall.
“For the good of the industry, it makes the most sense to keep these homeowners in the home to make the repairs. It’s just too challenging to sell these properties.” — Tara Williams, Altisource Portfolio Solutions
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“This relief is intended to help borrowers who need payment flexibility as they take steps to mitigate…problem drywall,” Terry Edwards, Fannie Mae executive vice president of credit portfolio management said in June when the announcements were made. “The issue potentially affects thousands of homeowners in a number of states, and we want to support those who are responsibly trying to honor their mortgage obligation in good faith while correcting the problem and protecting the health and safety of their families.” Following the lead of the GSEs and the VA, servicers are also trying to help borrowers, if for no other reason than to avoid having to repossess these defective properties and deal with the remediation. “Foreclosure will be the very last option a servicer would want to pursue with these houses,” Altisource’s Williams said. “The servicers are really trying to implement measures for borrowers that have been impacted by the drywall.” Williams added that many servicers will come closer to forgiving the debt entirely, walking away from the property and letting the homeowner work through the problem, than they would be inclined to foreclose and be burdened with the task remediating the drywall. But even what that does happen, the homeowner still has to come up with the funds to pay for the repair process. For its part, HUD has offered assistance to homeowners. In December 2009, HUD announced to cities, counties and states that the funds they receive from HUD’s Community Development Block Grant program can be a resource to help local communities combat the problem drywall. In addition, a HUD spokesperson said that funds from the FHA-backed 203(k) loan program can be used to fix impacted homes. “For the good of the industry, it makes the most sense to keep these homeowners in the home to make the repairs,” Williams said. “It’s just too challenging to sell these properties.” But inevitably, there are properties built with the defective drywall that are ending up in the REO inventories. When that happens, preservation companies are ready to not only identify the problem, but also to re-
mediate it. Safeguard Properties, a suburban Clevelandbased preservation company offers a home inspection service to detect Chinese drywall. In addition to a visual inspection for damaged wires or pipes, a human “smell test,” and an examination of the wallboard, Safeguard employs a combustible gas detector to determine if there are high levels of sulfur gas in the home. While the test can’t certify whether the house has drywall made in China, or if the drywall is the exact source of any problems, if Safeguard finds issues, it gives its clients bids for remediation. When a servicer has a property built with Chinese drywall in its REO inventory, it’s more likely that it will see the business end of a wrecking ball than a new owner. Investors buy damaged properties all the time, restoring them to a livable condition, before either renting or selling them, hopefully for a profit. But in the case of a house with Chinese drywall, the cost to repair the house is too great, Williams said. “Investors are looking for properties in areas where they can see making a reasonable investment and bringing the property inline with comparable properties in a neighborhood,” she said. “If an investor is in a neighborhood and identifies Property A that has Chinese drywall issues, and Property B that doesn’t have the same issues, but has other substantial repair requirements, that investor is going to avoid the Chinese drywall issue because of the expense.” Another issue is that while one property might undergo remediation, others in the neighborhood might still be affected by the drywall. A neighborhood overrun by Chinese drywall doesn’t make for a good investment because the cost of repair is greater than the potential returns. So when servicers get a house with Chinese drywall, they’ll likely demolish it in hopes of taking a smaller loss selling a vacant lot than a problem property. “It becomes a numbers game. If you can sell it as a vacant lot, it’s not as if the servicers aren’t exposed to that process,” Williams said. “We handle properties with code violations or foreclosures beyond repair. That concept is not foreign to servicers and they’re willing to evaluate that option.”
“If I have a defective car, I don’t file a claim with the auto insurance company, I go back to the showroom and they go back to the manufacturer.” — Michael Barry, Insurance Information Institute
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Switching to Unleaded For decades, lead was used as an additive to paint. It provided pigment, helped the paint dry faster and promoted durability by reducing cracking from shifts in temperature. But in 1978, the CPSC banned lead-based paint, limiting lead content to 600 parts per million (ppm). That number was recently reduced to 90 ppm. While it is effective as an additive in paint and other products like gasoline, lead is linked to a number of health concerns when it comes in contact with humans. Issues range from nervous system problems and delayed development or growth in children and can also cause kidney damage and other organ issues in adults. While using lead-based paint in residential applications has been banned for decades, the NAHB estimates there are 79 millions homes built and painted before the ban that potentially still have the toxic paint. As the years go by, the paint deteriorates and breaks down, turning to a fine dust that can be ingested when it gets airborne. To combat these issues, the EPA implemented a series of protocols for remediating lead-based paint in homes. Those new policies have been met with stiff opposition by many in the homebuilding and property preservation sectors. Critics claim the requirements are excessive in light of high expense and inadequate testing methods.
With the nation’s inventory of REO properties growing at unprecedented rates, the number of older homes that have lead-based paint under the care of servicers has increased dramatically. Under federal law, a seller of residential property built before 1978 must generally disclose lead-based paint hazards. But when a servicer assumes responsibility for a property, one of the first problems servicers face is determining exactly when it was built. Municipal land records are sometimes incomplete, and many times, aren’t available digitally, so servicers get creative, looking to appraisal documents, sending contractors to county records buildings or searching property tax data. But once a house is identified as potentially having lead-based paint, it is hard to determine whether it actually does, and EPA requirements dictate that its new protocols be used in all properties built before 1978, unless it can be positively verified that no lead paint exists. For the REO industry, that means more costs. According to NAHB spokesperson Calli Schmidt, there is no inexpensive test to determine the presence of lead paint and the tests currently on the market have a failure rate of up to 70 percent.
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According to the EPA, common renovation activities like sanding, cutting, and demolition can create hazardous lead dust and chips by disturbing lead-based paint, which can be harmful to adults and children. To protect against this risk, on April 22, 2008, EPA issued a rule requiring the use of lead-safe practices and other actions aimed at preventing lead poisoning. Under the rule, contractors performing renovation, repair and painting projects that disturb lead-based paint in homes, child care facilities, and schools built before 1978 must be certified and must follow specific work practices to prevent lead contamination. In addition to paying a fee, participating in eight hours of training and working for a firm that also has a paid registration as a licensed remediator, workers are required to contain the work area, minimize dust and clean up thoroughly. Instead of spending time and money to determine whether an REO property built before 1978 has lead paint, servicers and preservation companies are automatically using the lead-safe practices to remove old paint. The policy has been phased in over a period of two years, slowly building up to full implementation on April 22, 2010, the 40th anniversary of the first Earth Day. In response to unexpected demand for training, the EPA later announced in June that while the new rule was in effect, it would delay enforcement until Oct. 1 to give more companies and contractors the chance to take EPA-approved training, a decision that the NAHB applauded. “EPA listened to our concerns and did the right thing,” said NAHB chairman Bob Jones, a builder and developer in Bloomfield Hills, Mich., when the announcement was made. But one month later, NAHB, along with other trade groups including the Hearth, Patio & Barbecue Association, the National Lumber and Building Material Dealers Association and the Window and Door Manufacturers As-
sociation, sued the EPA, contesting the removal of an “optout” provision from its lead paint remediation policy. The 175,000-member NAHB has many members that in addition to homebuilding activities, also perform renovation work. The group even has a council within its governance called NAHB Remodelers, which has about 11,000 members. While NAHB’s official stance is that it supports efforts to control lead contamination, there are too many issues with the implementation of the policy. Under the opt-out provision, consumers could allow contractors to bypass extra preparation, clean up and record-keeping requirements in homes where there were no children under 6 or pregnant women, thus avoiding additional costs, NAHB said. “Removing the opt-out provision more than doubles the number of homes subject to the regulation,” said Jones. “Removing the opt-out provision extends the rule to consumers who need no protection.” The homebuilder and renovation groups will challenge EPA’s action on the grounds that the agency substantially amended its lead paint regulation without any new scientific data and before the regulation was even put into place on April 22. The EPA announced its repeal of the provision in the Federal Register on May 6. “Even under the original rule, the opt-out provision was not available in homes where small children or pregnant women live,” Jones added. “That shows that this change provides no additional protection to the people who are most vulnerable to lead-based paint hazards.” Remodelers’ and other contractors’ estimates of the additional costs associated with the lead-safe work practices average about $2,400, but vary according to the size and type of job. For example, a complete window replacement requires the contractor to install thick vinyl sheeting to surround the work area both inside the home and outdoors — with prep time and material costs adding an estimated $60 to $170 for each window, according to the NAHB.
According to the EPA, common renovation activities like sanding, cutting, and demolition can create hazardous lead dust and chips by disturbing lead-based paint, which can be harmful to adults and children.
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That added expense serves as a “reverse incentive” to customers and contractors, NAHB’s Schmidt said. “People are saying, ‘I know you’re supposed to do these lead safe practices but I wish you didn’t because they’re too expensive.’ The remodeler cannot do that and not break the law,” she said. “There’s this big market of uncertified remodelers that are willing to take their chances because the EPA is not necessarily going to crack down on them.” There are concerns from the REO industry as well. While the EPA estimates more than 300,000 contractors have received the proper training, REO preservation companies complain that the EPA doesn’t make it easy to verify a contractor’s compliance. Altisource’s Williams said her company has elected to use a number of regional companies to do work on properties that might have the lead-based paint. By funneling work to a set number of sub-contractors, Altisource knows its working with companies in compliance with the regulation. “My sense is that the EPA is somewhat overwhelmed by the response rate they’ve received from vendors, property owners and asset manager firms really trying to make certain we understand the requirements, that we’re in compliance and understand the resources avail-
able to us to go out and find out about service providers,” Williams said. “Earlier on in the process it seemed to us that the EPA had more inbound requests and questions than they could probably handle at that point.” “It has not been easy to go to any website or to call in to a customer service line and get a list of all the approved providers,” she added. “We take responsibility for vetting our vendors, but it becomes challenging if we’re having to go down our existing vendor panel, reach out to them, ask them if they’re certified and obtain the certification documents. It would be much easier if we had a central point at the EPA to verify the certified vendors.” Whether it’s dealing with Chinese drywall or an older home that potentially has lead paint, servicers and property preservation companies rely on the REO brokers and agents in the field to provide information as soon as possible when possible issues exist. Preservation teams thrive on timely response to issues; doing so helps dispose of REO properties faster, ultimately saving the investor or lender from taking additional losses on an REO sale. “There’s a collaboration between the inspector and the listing agent to understand the history of the property and to thoroughly inspect and understand what risks may be present as early as we can find out,” Williams said.
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PERSPECTIVE Greg Tolander
C h i e f O p e r at i n g Off i c e r F i e l d Ass e t S e r v i c e s
Proof of performance reporting enabled through the power of technology Throughout the years, companies have brought to market innovations that provide unmatched benefits to organizations and individuals in every industry. Often these innovations are referred to as disruptive or revolutionary and have the potential to fundamentally change the marketplace. Traditionally, the property preservation industry has been slow to develop and adopt technology but we are now experiencing a disruptive technology that is having a profound impact on proof-of-performance reporting for field services. A new generation of photo management systems is now being deployed that will eventually eliminate the antiquated and time-consuming processes used today by property preservation providers. This system has enabled a revolution in efficiency and cost savings. For years, property preservation companies have struggled with how to quickly, easily and accurately document completed work orders in the field. Some field services companies have upwards of 100,000 properties to service and thousands of contractors. This can equate to millions of photos to maintain on a weekly basis. The sheer number of photos being taken, uploaded, labeled, inspected, submitted and stored is a growing challenge. Many vendors rely on e-mail, file transfer protocol (FTP) and photo sharing sites for this process, and there is no easy way to organize the photos, associate them with work orders and ensure that the photos represent an accurate record of the work performed. To date, field crews such as those responsible for lawn and pool maintenance have to document their work using a Secure Digital (SD) disc, at times requiring over 20 before-and-after photos. Once complete, the card is dropped off at the main office, and an office manager downloads the photos, sorts them into property folders, conducts a quality check and uploads them into the correct customer portals. Reviewing and organizing photos is a time-consuming system with a high chance of error and fraud with no security requirements. Thanks in part to pioneering technology being developed by companies like Pruvan in Austin, Texas, ”photo enabled workflow collaboration” is being taken to a whole new level. Asset managers, field services providers, inspectors and appraisers can collaborate on work orders and more easily upload and organize photos wirelessly, directly from jobsites, making today’s
“Asset managers, field services providers, inspectors and appraisers can collaborate on work orders and more easily upload and organize photos wirelessly.” work order management systems more efficient and ultimately useful. As an example, FAS has integrated Pruvan’s technology into a very efficient collaboration process with our vendor community across the nation. FAS provides an online/offline software tool called “FASconnect Office” to our vendor/partners to collaborate daily on over 100,000 properties under management. FAS also offers Pruvan enabled “FASconnect Mobile” to vendor field service crews on the jobsite to collaborate at the point of activity, greatly simplifying the work process, preventing miscommunication, and reducing the time it takes to complete field work. FAS uses Pruvan as a trusted third party that provides clients a certified service record, an absolutely tamperproof evidence of when and where and for whom, the service work was performed. FAS is able to leverage the Pruvan “cloud” to securely associate evidence photos with their work orders and securely manage photo archiving and storage. Pruvan is processing over 500,000 photos per day and 15,000 work orders per week for FAS. This scale and level of reporting integrity would be impossible to achieve with traditional technology. Innovations such as advanced photo management systems reduce operational costs and workload, improve efficiency, reduce the risk of fraud and enable field service providers to process payments faster. As with any disruptive technology, the industry may be slow to adopt at first, but the results will no doubt prove the return on investment. HW FoCUS // propert y preservation
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PERSPECTIVE Tara Williams
V i c e P r e s i d e n t, F i e l d S e r v i c e s A lt i s o u r c e
Keeping REOs competitive against short sales Short sales have steadily gained traction since last fall’s announcement of the Home Affordable Foreclosure Alternatives (HAFA) program. What may be surprising, however, is that the increase in short sales isn’t limited to the large metropolitan areas feeling the most pain from the housing bubble and collapse. Some estimates put the share of short sales and bank repossessions on the for sale market as high as onethird of all listings in the U.S. The April 2010 Inside Mortgage Finance report also states that short sales soared from 12.4 percent in November 2009 to 18.6 percent in March of this year. With short sales now accounting for nearly one in five sales, they aren’t becoming a competitor to the REO market — they already are one. Because REO properties are unoccupied, there’s an unstated and inherent expectation that they’re distressed and will therefore need repairs — the cost of which, of course, will have to be covered by the buyer. In contrast, because short sale properties are occupied, they’re assumed to be in habitable condition, and most likely much better. The bottom line is that buyers perceive a short sale will require less work and less of an investment after closing than an REO property will. That differential in perception is hugely important when it comes to marketing the property. Getting and keeping an REO property in saleable condition can be task intensive and tedious, but a few simple steps can ease the burden and help keep that REO as a viable contender in the marketplace. Salability for REO properties is highly dependent upon proactive prevention. That proverbial ounce of prevention can be worth a pound of cure. And in this case, that cure can cost tens or even hundreds of thousands of dollars in repairs or lost value. REO properties should be inspected every two weeks at the barest minimum. If that seems like a lot, remember that a short sale competitor is inhabited by someone who can catch potential problems, make repairs and prevent vandals or vagrants from occupying or damaging the property, every day, 24/7, until the property is sold. There are any number of problems that can arise in any property, occupied or vacant. Consistent and frequent inspections can help to minimize risk and prevent costly and potentially deal-breaking damage. Also make sure the property is registered with the city as vacant. Establish contact with local code en-
“The bottom line is that buyers perceive a short sale will require less work and less of an investment after closing than an REO property will. “ forcement officials and provide them with your contact information for any issues that develop with the property. If the property is found to be violating any codes, it’s the code enforcement officials that will try to reach someone to rectify the issue. If they can’t find the right person, they won’t likely put out an all points bulletin or send out a search party. They’ll simply issue fines and violation notices, which in addition to being an added expense, can become title defects that lead to delays when the property is sold. If you choose to use an outsourcer for these tasks, make sure you’re working with property preservation specialists, and make sure they’re actually inspecting the interior as well as the exterior when visiting the property. A simple drive-by isn’t enough to protect an investment worth hundreds of thousands of dollars. A lot of problems that start in a home’s interior can go largely undetected with a drive-by evaluation. They can even progress to the point of sustaining such damage that it’s nearly impossible to salvage. On that note, it’s also a good idea, whether managing the process in house or using an outsourcer, to make sure that all vendors performing work on the property are qualified for the job, licensed and have appropriate insurance. Keeping an REO property in shape to compete with short sale properties doesn’t have to be difficult. The truth is, a lot of value-crushing problems can easily be avoided by using a definitive, proactive program for property preservation. HW FoCUS // propert y preservation
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PERSPECTIVE Mike Carroll
C h i e f F i n a n c i a l Off i c e r Mortgage Contr acting Service s
Building an all-star field service team Have you ever considered that baseball managers are similar to default managers? In baseball, managers are responsible for making situational decisions and strategically positioning their personnel to achieve success. These decisions are based on an ever-changing set of variables including timing, expertise of players and scenarios. Default managers can also apply several components to achieve and determine success, from measurement and allocation techniques to just enforcing the simple “team” concept. Similarly, both manage “field personnel” who are expected to consistently produce results every day and over a sustained period of time. Whether on the baseball field or in the servicing field, competition drives excellence. Statistics, whether batting averages and runs batted in or home inspection times, clearly define the all-stars. Default managers should consider developing a team of at least two field service management companies. Just as baseball players compete for their respective positions, having a sense of friendly competition between vendors improves performance. Conversely, single sourcing leaves room for a monopoly of sorts. Individuals may become complacent since there is no baseline for a job well done or incentive to improve. Managers can then reward the top performers by allocating additional work to the top vendor, which in turn penalizes the poorer vendors by reducing their ”playing time.” Even competition between business models should be encouraged. An internal field service group can and should share a portion of its work with a field service company. This enables managers to measure the relative performance, benefits and cost of each, encouraging them to consistently operate at their optimal levels. Having a field service company work with an existing internal department can also help in times of high volume, as the vendor has the flexibility and scalability to accommodate fluctuations in demand. This approach is similar to having reserve players on the bench in case of injury or fatigue — no team, no matter how great, would make it far without them. Statistics, or measurements of success, are fundamental to any game or project. Default managers having scorecards in place can determine performance levels in an objective manner. For instance, if Field Service Company A completes 98 orders within a 15-day period, and Company B only completes only 86, the latter is likely to speed up its work moving forward. Regularly reported comparative statistics with multiple vendors provides a 30 HW FoCUS // propert y preservation
‘Managers can then reward the top performers by allocating additional work to the top vendor, which in turn penalizes the poorer vendors by reducing their ”playing time.”’ more real-world measure. Trending these measures also helps managers identify increases and decreases in performance. Using a multi-vendor approach in this industry cultivates an environment for continuous improvement and innovation. To garner accurate results, it is important to ensure that no one has the home team advantage every time. Managers can level the playing field by placing orders based on terminal loan numbers. Splitting responsibilities due to numbers (rather than geography, type of loan or any other potentially bias variable) will eliminate varying conditions and ensure a fair and accurate comparison. Creating a competitive environment, measuring performance and rewarding success will guarantee a home run in field service management every time. Leverage all of these factors and you will produce your own recordbreaking teams.
PERSPECTIVE V i c e P r e s i d e n t, M o r t g a g e S e r v i c e s D i v i s i o n CIS Group
Brice Bishop
Preventing collateral damage In the face of the financial crisis and in spite of every effort being made on a federal level to curb foreclosures, every connected industry player has seen the tsunami of foreclosed properties growing and is now watching them pound the marketplace month after month. Servicers are overwhelmed, service providers are overwhelmed, and the fate of maintaining these assets rest in the hands of thousands of outsiders that have flooded the property preservation industry. So what’s the problem? You would think that national and regional preservation companies would be thrilled with the fact that they have thousands of new contractors to further build out their networks, replace existing vendors, or at the very least, plug holes in areas of weak coverage. However despite the additional “options,” if you can even call them that, there are two underlying issues that reputable companies face in trying to manage the flood of work orders being delivered while still satisfy the demands of their clients. The first has already been alluded to and that is experience. In today’s marketplace it is rare at best to find a new vendor that has the experience required to properly complete even the simplest property preservation task. As more and more companies adopt the “faster and cheaper” mentality, the only possible outcome from these inexperienced vendors is poor quality service that often times has to be followed up by a subsequent vendor that can be trusted to finish the job properly. The
days of being able to merely confirm that a new vendor carries adequate amounts of professional liability coverage and gives you their word that they have the experience necessary to do the job are gone. To correct this issue — or in an effort to at least control it from continuing to spiral out of control — vendor management departments must perform greater due diligence on the front end and prohibit these vendors from making it to approved vendor panels. The second challenge that every property preservation company faces regardless of their size, service area, technology or quality control process is that of integrity. The industry is full of stories where contractors hired to do a job fraudulently reported the condition of a property or even worse, caused their own collateral damage in an effort to get a bigger bid approved and make more money. Combating this problem is not easy, but it is possible. Progressive companies are realizing the value in partnering with third party vendors that specialize in performing pre-preservation assessments but have no vested interest in the outcome. The result is a more reliable assessment of the property is developed and in turn a more accurate preservation work order is generated for only the services that truly need to be completed. Who knows what the future will hold, but in an industry where uncertainty and adversity seem to be the norm, one principle holds true — ethics has become the defining quality of 21st century business. Those who choose to evade will ultimately perish, while those who evolve will inevitably prosper.
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PERSPECTIVE Te Leone
S e n i o r m a n a g e r , p r e - f o r e c l o su r e / i n s p e c t i o n s e r v i c e s cypre x x services
Spotlight on REO makes quality assurance more important than ever There is a growing awareness surrounding foreclosed properties by local municipalities, media outlets and concerned neighborhoods. This heightened awareness is putting a spotlight on the need for better quality assurance efforts. Cyprexx has recently revamped its quality assurance processes and is sharing some best practices below. Flooding a market with inspectors is an effective way to view a large number of properties over a short period of time. This “blitz” strategy is efficient when coordinated and executed in conjunction with vendor training. Cyprexx has most recently paired members from its quality assurance division with preservation coordinators and managers to get 20 teams on the ground inspecting properties with vendors to ensure the level of quality. The feedback received from vendors who have taken part in this process is positive — they are grateful for the immediate feedback and they feel engaged. They come out of this process clear on expectations and more invested in meeting or exceeding them. The preservation coordinators also reap the benefits of seeing properties firsthand rather than through photos, and the process helps them build relationships with their vendors. One strategy to consider in an overall quality assurance program is whether to separate the performance of initial services from ongoing services. There are two schools of thought: One thought is that using the same vendor for both sets of services provides clear accountability. The other concept is that using different vendors for those sets of services offers a second set of eyes as well as another level of quality assurance at the point of handoff between vendors. By requiring the ongoing services vendor to sign-off on a checklist before taking responsibility for the property, they are verifying that the initial services were completed to specifications. Most vendors want to do a good job, and most strive to attain that, so it’s important to let them know when a job has been done well. But whether it’s from inadequate communication of expectations, insufficient
“Most vendors want to do a good job, and most strive to attain that, so it’s important to let them know when a job has been done well.” training up front or any number of other reasons, it is not uncommon to find services on properties falling short of the mark. Charting each group of inspections to document and track the trend in each area can be a useful tool in training vendors, reporting quality assurance results to clients or simply to keeping an eye on the percentage of overall properties reviewed and the level of service performed on them. Cyprexx has found that vendors who perform their own quality assurance by inspecting the work of their crews provide an overall higher-quality level of services. When training vendors, Cyprexx strongly encourages them to put in place their own system of quality control. A solid quality assurance program can provide farreaching advantages. From improving relationships with vendors and building confidence with clients, to improved turn around times, better marketability, and cost savings for all parties are just some of the benefits that can be realized by implementing the right quality assurance program.
“One strategy to consider in an overall quality assurance program is whether to separate the performance of initial services from ongoing services.” 32 HW FoCUS // propert y preservation
PERSPECTIVE Joseph Miranda
Pre sident N at i o n a l R e a l Es tat e F i e l d S e r v i c e
Fast response time key to preserving value The phrase “Time is of the essence” has never meant more than it does today for the property preservation industry. As properties are transferred from one assignor to the next, the timeliness in which they are attended becomes paramount in determining the margins that will be realized in the current market. Therefore having the resources on the ground to inspect and correct any deficiencies of the assets on a timely basis is crucial to an efficient and profitable field service operation. To illustrate: My company was recently contacted by the city of Cleveland, Texas, a town about 50 miles north of Houston, and was informed by the city safety officer that infractions for safety and health violations had been issued on several recently abandoned properties. The City requested we assist them in contacting the lending institution. After several hours of inquiring through the last known mortgage company, I failed to find the rightful owner or servicing company responsible for the property. It made me wonder how many other properties were out there in the same state of unknown.
The only way to minimize the cost of these “toxic assets” is by contracting with a known company that has the people and technology to quickly bring needed information to the table. They can make a timely assessment of the situation, then act quickly on your behalf to cure all issues to ready the property for sale. Here’s my shorthand for the three essential qualities of effective property preservation: Identify; Assess; React. With conditions in today’s real estate market, we no longer have the luxury of taking our time in handling these properties. In our company, our people are trained to respond within 48 hours so that informed assessments can be made as quickly as 96 hours from the first contact with the property. With the technology available today, you can almost have real-time inspections online while your contractor is in the field. The importance of a field service company in preserving value and realizing margins has never been greater. This importance will grow in the next few years with the current state of the economy and the housing industry. A field service company can be an integral partner. But making sure you’ve chosen the right one is essential.
What do six out of the ten top servicers have in common? They all have former staff members currently working for MCS. We have walked in the shoes of our clients and know the issues they encounter from the inside out. Over our 24-year company history, we have developed an industry expertise that is unmatched. Our management team has more than 200 years combined experience in our industry, rivaling that of any field preservation company. From our fully scalable customer service and technology platforms to our vendors in the field, our expertise is visible in everything we do. 101 E Kennedy Blvd, Ste 1900 • Tampa, FL 33602 • 813.387.1100 • www.MCS360.com
We have walked in your shoes.
Oil spill
Gulf home values could drop by $3 billion in five years
By Austin Kilgore
Property values on the Gulf Coast could decrease as much as $648 million over the next year and up to $3 billion during the next five years because of the oil spill plaguing the region, according to a report by CoreLogic. CoreLogic added that in the unlikely but worst-case scenario of the spill reaching around the Florida Keys and up the Atlantic Coast, the losses could skyrocket to $28 billion. There are 15 major counties along the Gulf Coast in Mississippi and Florida that are most at risk for property value declines — an area that all told, includes more than 1,000 miles of shorelines and more than 600,000 residential properties. The projections of declining value are based on CoreLogic’s estimates of the annualized economic value of beach access. That access is currently at risk, and could be impacted for up to five years because of the oil spill. “Using well established economic techniques for the measurement of the economic value of environmental amenities an estimate of the loss in beach amenity value is substantial,” CoreLogic chief economist Mark Fleming said in a press statement. “While it is by no means a certainty that the major coastal communities along both coasts of Florida will be impacted at all by the oil spill, the lost amenity value in these markets could be particularly high.” Reduced beach access will push home prices downward, CoreLogic said. The closer a property is to the coast, the greater the potential decline in value. Specifically, the average decline ranges from $40,000 to $56,000 per property, with beachfront homes potentially declining by as much as $80,000. Over the next five years, CoreLogic projects the greatest housing market declines in Pensacola, Fla. ($1.6 billion), and Gulfport, Miss. ($1.2 billion). In addition, CoreLogic said individual property declines average the highest in Gulfport ($56,000), Mobile, Ala., ($45,000) and Pensacola ($40,000). While the CoreLogic data analyzes the region as a whole, Seattle-based Greenfield Advisors launched a website, gulfspillvaluations.com, that allows property owners affected by the spill to obtain a report on the economic 34 HW FoCUS // propert y preservation
impact of the spill on their individual property. Users indentify their specific property and the automated report shows the projected decrease in value, as well as the methodology for the estimate. The projection uses tax assessor records and calculates a “pre-incident” valuation based on historical market trends. A second post-incident valuation is determined based on analytical techniques honed during the Exxon Valdez oil spill and Hurricane Katrina. Greenfield said its report can be used to supplement claims for compensation homeowners make to BP. “This is the same comprehensive analytical work we do for million- and even billion-dollar litigation projects,” said John Kilpatrick, CEO of Greenfield Advisors in a prepared statement. “There are normally very few individual property owners whose situations justify hiring us, but the economies of scale in this circumstance make it possible to offer our expertise to anyone harmed by the BP oil spill.” Workers stopped the flow of oil in July with a cap on the well, while work on permanent relief wells continues as of late August. But the daunting task of cleaning the oil already spilled into the Gulf — estimated to be in the millions of gallons per day at the height of the crisis — will continue for months, if not years, to come. If ocean currents push oil further along the Florida coast, an additional 238,000 properties in Panama City, Tampa Bay, Cape Coral and Naples would experience price declines as much as $11 billion, CoreLogic added. Should the oil reach even further south and onto Florida’s eastern coast, the property value losses in Miami, Key West, Palm Bay, Daytona Beach and Jacksonville would reach as high as $13.5 billion and impact nearly 300,000 additional houses, though CoreLogic acknowledges that this scenario is unlikely. “The total loss in amenity value in communities already being impacted by the oil spill to date is potentially as high as $3 billion over five years,” Fleming said. “Our hope is that the oil spill is contained and the loss in amenity value is further moderated by a speedy cleanup and a return of beach amenities to the affected communities’ homeowners.”
PERSPECTIVE Barry Sando
Group Executive, Business and Information Services CoreLogic
Technology, data help lenders prepare for natural disasters Last year, the Flood Services division at CoreLogic determined that a Tennessee property in the midst of the closing process was located within a high-risk flood zone, known as a Special Flood Hazard Area (SFHA). The homebuyer loudly protested, claiming that the cost of flood insurance was too burdensome. The Flood Services team, using advanced geospatial tools and data, was brought in to examine the situation further and confirm the exact location of the structure in relation to the Federal Emergency Management Agency (FEMA) flood zone map. When a final determination concluded that the home was indeed within a SFHA, the lender added mandatory flood insurance to the loan requirements per federal regulations — needless to say the homebuyer was less than pleased. A year later, the Flood Services compliance manager was contacted by the lender, who just days before had received a tearful call from the homeowner. Recent storms and subsequent floods that ravaged the southeast and much of Tennessee had caused significant damage to the home. The homeowner thanked the lender for moving forward based on the CoreLogic geospatial data, explaining that he didn’t know what he and his family would have done without flood insurance to help pay for the extensive damage. While this story has a happy ending, such is not always the case for lenders and homebuyers when dealing with natural hazards. More often than not, lenders are focused on the financial viability of the homebuyer and are blind to the natural hazards of the property. Understanding, with geographic precision, the existence of outside threats to properties is growing in importance to lenders and their servicers as they look to increase transparency of their loans. Our development of natural hazard models for hurricanes, wildfires, earthquakes, sinkholes and other events that require additional insurance to protect the property are combined with our database of more than 124 million parcels and other key elements (like distance and value) to help servicers get a complete picture of risk to any loan in their portfolio. Another recent example: CoreLogic reviewed a servicer’s portfolio of loans in Savannah, Ga., using our hurricane storm surge model, parcel data and the Federal Emergency Management Agency (FEMA) flood maps. Our hurricane storm surge model maps the flow of water pushed inland by a hurricane. Utilizing our geospatial tools and parcel data, we mapped the location of each loan to its exact position on earth. We then overlaid the FEMA 100-year flood zone to determine which
properties fell within the zone and more than likely (due to federal requirements) had flood insurance. We then subtracted these properties from the analysis since the value of the loan would be covered by the insurance. We then overlaid our storm surge model, looking at hurricanes with category strengths of one to five. The analysis showed that out of 18,000 total properties, more than one-half were in danger of being flooded by a Category 5 hurricane and almost 40 percent were at risk for a Category 3 hurricane. The concern was only 5,000 of all the properties fell within the FEMA 100-year flood zone, leaving over 9,000 exposed to hurricane storm surge with possibly no insurance to cover the cost of the asset, as homeowners insurance does not cover flooding. Moreover, research from the University of Wisconsin has shown that borrowers whose properties are “underwater” — loan value exceeds fair market value of the property, also known as negative equity — delinquent or in foreclosure are more likely to walk away from a property in the event of a natural disaster. Even man-made disasters like the current Gulf oil spill can have proximal impact. For example, properties within 500 meters of affected beaches may lose value, creating negative equity for the borrower and the lender. Additionally, large pools of loans are often sold without full disclosure of the condition of the property following a major natural event. Consider the case of the Texas homes that were wiped out by Hurricane Ike. Those loans were sold to servicers immediately following the storm, despite the fact that little more than sand was left where houses once stood. At CoreLogic, we are seeing more and more lenders recognize the importance of considering the impact of location as they try to increase the transparency of their portfolios both for investors and regulators. Mapping the exact location of the properties to the parcel level, and understanding what potential hazards could impact the value of the property at that location can help these servicers make better decisions when assessing their portfolios. Like the Tennessee example, this knowledge can also help determine what additional requirements may be required at origination. The bottom line is that modern geospatial methods and data can help lenders at all points in the process, from origination, to securitization and servicing. HW FoCUS // propert y preservation
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PERSPECTIVE Dawn Marie O’Connor
S e n i o r v i c e p r e s i d e n t, s t r at e g i c bus i n e ss D i m o n t & Ass o c i at e s
Are you maximizing your rights as the mortgagee? Many of the maintenance activities on defaulted properties are empowered via mortgagee rights contained within the deed of trust, or the mortgage deed, such as inspections and preservation of the property. Additionally, the deed of trust or mortgage deed provides the rights and responsibilities of the mortgagee regarding the processing and handling of hazard insurance claims and proceeds, typically Section 9 of the deed. While there can be substantial differences between actual damage and insurable damage (perils), a hazard claims settlement often offsets necessary repair costs. When damage is repaired, it restores the subject of the repair to original or new condition. Insurable damage that is repaired provides an opportunity to recover the depreciation held back from the original claim payment in a supplemental claim. Hazard claims on behalf of the mortgagee are filed against either a lender-placed policy in effect (forced) or a retail (homeowner) policy that was in effect at the time or discovery of the loss or damage. It is a common misconception that it is easier to file claims with lender-placed carriers due to the familiarity those companies have with processing mortgagee claims. While this might have been somewhat true in the past, increased claims activity in recent years has led not only to increased losses but also to the hiring of inexperienced staff just to keep ahead of the volume. This has led to additional denials and requests for documents that may be unnecessary to negotiate the settlement. Processing retail claims is altogether different and has varied levels of difficulty due to decentralized processing centers and a lack of expertise in handling mortgagee claims. Potentially there are millions of recovery dollars at stake for many servicers and their investors. There has never been a more important time to ensure your hazard claims recovery team has the expertise to successfully manage these challenges and capitalize on the recovery potential. An important but rather unknown fact is that the majority of states have adopted codes or statutes requiring specific licensing requirements for those entities representing an insurer (carrier) or an insured (borrower, lender). In many of those states, an entity (individual or company) may only have one license or the other, suggesting that one can represent either the insurer or the insured, but not both. Licensing requires experience, examina36 HW FoCUS // propert y preservation
tion, and continuing education. If you outsource any of these processes, it is a sound practice to ensure proper licensure if you want the most experienced and trained professionals advising you and negotiating your claims. With investors realizing so many losses in the current economic climate, it is essential to point out a few steps that servicers can take that will effectively harness the potential to maximize hazard recovery revenue for their investors and shareholders. The mortgagee clause is a standard insurance policy requirement of the lender at the closing of the loan that protects the interests of the lender or investor. One of the best provisions of this mortgage loss payee clause is that the mortgagee is entitled to losses due to acts of the borrower/homeowner. Normal perils excluded by acts of the mortgagor are claimable by the mortgagee such as theft or vandalism. I remember one particular case in which the homeowner was ultimately arrested for arson, which of course voided any claim he had for fire loss. This act of the mortgagor however was claimable as a loss for the mortgagee and the original claim denial was overturned and the full fire loss draft was paid to the mortgagee. Retail policies however contain requirements for the mortgagee to take certain actions to notify the carrier of a change of risk regarding ownership, occupancy and foreclosure. In recent years, there have been diverse opinions and in a landmark court case in Tennessee, it was decided that foreclosure is not an increased risk, and did not require special notification to the insurer. That being said, this issue continues to be debated and there have been significant claim denials citing failure to notify the carrier of foreclosure as the reason. It is a best practice to routinely send change of risk letters, for vacancy and foreclosure, and change of ownership. Many servicers have chosen to not make certain process changes to increase recoveries due to the loss severity ratio limitations of the policy and its effect on their premium. It is possible however to build an effective hazard claims solution that maximizes recoveries without having a negative effect on this loss severity equation. To really maximize recovery revenue, servicers should analyze the entire process and policy with specialists in this area to ensure that they are employing the most relevant best practices available to support their overall goals. These are just a few ways in which a servicer could increase their hazard claims recoveries and maximize stakeholder return on investment, while exercising their mortgagee rights to protect and preserve the property.
reference
The Valuation Directory A listing of field services and preservation service providers There are myriad property preservation companies across the country, each offering a wide menu of options and services. To compile an index of property preservation companies across the country and the services they offer, HW Focus asked company officials to participate by providing information about their businesses. This directory is based on what these industry firms provided. national FIRMs Company Name
A2Z Field Services
Headquarters Dublin, OH
Employees & Vendors Capacity to support 75,000 orders per month
Preservation Services Offered: Lock and Lockbox Installation, Securing Services, Winterizations and De-Winterizations, Debris and Hazard Removal, Maid Services, For Sale Sign Placement and Removal, Safety Issue Compliance, Lawn Maintenance, Miscellaneous Maintenance and Repair, Quality Assurance Inspections Non-Preservation Services Offered: Borrower Contact Services, Property Condition Reports, Occupancy Verification Services, Valuation Services, BPOs, Eviction Services, Quality Assurance Inspections, Cash for Keys, Vacant Property Registrations Company Overview: A2Z Field Services is a nationally recognized, women-owned, mortgage field service provider dedicated to assisting loan servicers, government agencies and real estate auction companies throughout the United States with their property inspection and preservation needs. A2Z’s inspection services provide our clients with critical information regarding property condition, occupancy and borrower contact information. A2Z’s preservation services help to ensure that vacant properties are secure and adequately protected throughout default, foreclosure and sale.
Altisource Portfolio Solutions
Kennesaw, GA
3,000 employees and 3,000-plus vendors
Preservation Services Offered: Occupancy Reports, Property Inspections, Bankruptcy Inspections, Fannie Mae Form 30, Deed-in-Lieu of Foreclosure Inspections, Presidential FEMA, Residential/Commercial Door Knock Services, Home Inspections for Originations, Preservation Services, Property Securing, Repairs, Trash and Debris Removal, Cash for Keys, Demolition, Utilities Management, Lawn Maintenance, Winterization, Biohazard Remediation, Code Violation Abatement Non-Preservation Services Offered: Real Estate and Mortgage Portfolio Management Services, Asset Recovery, Customer Relationship Management and Mortgage Technology Solutions, REO Asset Management Services, Property Inspection and Preservation, Settlement Services, Valuations, Due Diligence and Forensics, Loan Processing and Fulfillment, Default Management, Homeownership Retention, Business Process Outsourcing, Charged-Off Mortgage Collections, Legal Management, First Party/Customer Relationship Management, Spend Management, Residential Real Estate Servicing, Commercial Servicing, Transaction and Vendor Management, Correspondence Management, Homeowner Retention Company Overview: Altisource Portfolio Solutions is a provider of services focused on high value, knowledge-based functions principally related to real estate and mortgage portfolio management, asset recovery and customer relationship management. Utilizing our integrated technology that includes decision models and behavioral based scripting engines, we provide solutions that improve our clients’ performance and maximize their returns.
Britannia Development Company
Wayzata, MN
25
Preservation Services Offered: Lock Change and Re-Key, Board-Ups, Debris Removal, Winterization, Vehicle Removal, Cleaning, Lawn Maintenance, Photographs, Snow Removal, Securing Windows and Doors, Eviction Assistance, Water Removal, Pool/Spa Secure and Drain, Inspections Non-Preservation Services Offered: Termite, Roof and Emergency Repairs, Complete Rehab Services Company Overview: Britannia Development Company is a nationwide real estate field service company with more than 35 years of combined REO and construction experience. We are well equipped to handle all of your REO needs. Our commitment to serve our customers in a prompt, professional manner has allowed our company to grow throughout the years.
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Company Name
Headquarters
Employees & Vendors
CIS Group
North Richland Hills, TX
More than 1,900
Preservation Services Offered: Initial Securing/Lock Changes, Window/Door Board-Ups, Debris Removal, Winterization, Grounds Maintenance, Roof Repairs, Sales Cleans Non-Preservation Services Offered: Door Knock Inspections, Occupancy Inspections, Pre-Preservation Inspections, Property Condition Reports, Fannie Mae Form 30, Borrower Outreach, Loan Modification Assistance, Property Valuation Services, Call Center Services, REO Auction Marketing Assistance Company Overview: CIS Group is a leading national provider of mortgage field services to the default and REO marketplace. Our client base consists of top tier lending/servicing institutions, asset management firms, valuation providers, secondary market investors, auction warehouses, and others. Our reputation for completing high quality field services on time, and our unrelenting attention to detail builds trust and confidence with our clients and is often the largest single point of separation between us and the competition.
CoreLogic Field Services
Westlake, TX
More than 300
Preservation Services Offered: Inspections, Property Preservation Services, REO Clean Outs Non-Preservation Services Offered: Vacant Property Registration, Violation Curative Services Company Overview: CoreLogic Field Services handles the property preservation activities needed by lenders to ensure compliance to investor guidelines throughout the lifeline of a defaulted loan. In addition, CLFS maintains a national presence and provides services that are reflective of current industry standards and regulations.
Cyprexx
Tampa, FL
500 employees and 4,000 active vendors
Preservation Services Offered: Securing Properties, Debris Removal, Sales Cleans, Evictions, Cash For Keys, Board-Ups, Winterizations, Snow Removal, Ongoing Maintenance Services, Pool Clean and Maintenance Non-Preservation Services Offered: Small-Scope Repair Services and Broker-Requested Property Preservation, GSE SAM Designation For Large-Scale and Full-Scope Repair Services, Vacant Property Registration Services, Tenant Repair Services and Occupancy, Property Condition, Habitability and Rentability Inspections Company Overview: Cyprexx is a family-run company whose founders have roots in homebuilding and local REO repair. It provides national property preservation, repair and inspection services. Cyprexx utilizes proprietary software to provide best-in-class technology to manage the escalating demand in REO services, while providing transparency and 24-hour access to its clients — which include many of the largest financial institutions in the country. Cyprexx has a 20-year track record of providing exemplary and responsive customer service and is dedicated to a process of continual improvement.
Energy REO Solutions
Brooklyn Park, MN
50
Preservation Services Offered: Trash Out, Re-Key, Initial Sales Clean and Janitorial Service, Winterization, Board-Up, Roof Tarps, Lawn Service, Snow Removal Non-Preservation Services Offered: Soil to Roof Construction, Mold, Water, Fire, Smoke and Meth Remediation, REO Services, Renovation Services Company Overview: Energy REO Solutions is a premier provider of soil to roof construction services, remediation services and property preservation to the residential and commercial REO industry. We offer complete project management services for repairs and other real estate services including property preservation, hazard claims, inspections and loss mitigation. It is our goal to provide our clients with the expertise and services they need, large or small.
Field Asset Services
Austin, TX
13,361 local contractors, 1,501 preferred vendors
Preservation Services Offered: Re-Key and Secure Openings, Board-Ups, Eviction Lockouts, Trash Outs, Winterization, Janitorial, Landscaping, Snow Removal, Pool Servicing, Exterior Maintenance and Repairs Non-Preservation Services Offered: REO Remodeling, Code Compliance, Utilities Management, Agent and Attorney Reimbursements, HOA Relationship Management, Pool Maintenance, Vacant Property Registration Company Overview: FAS services nearly 100,000 properties with a combined value of $7.1 billion on behalf of our customers. Our quality, service and performance keeps our clients loyal and satisfied. Our flat fee pricing philosophy is to remove uncertainty and doubt from our transactions. Our customizable schedules allow you to be in control. We strive to earn your trust and empowerment so that we can manage the daily hassles and allow you to focus on driving value from your property.
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reference Company Name
Headquarters
Employees & Vendors
Five Brothers
Warren, MI
—
Preservation Services Offered: Securing, Debris Removal, Winterization, Lawn Maintenance, Snow Removal, Convey Maintenance, Second Bids Non-Preservation Services Offered: Inspections, REO Management, Property Valuations, Rehab Services, BPOs, Notary Services, Document Management and Processing, Workflow Management, Loss Mitigation Software Company Overview: Founded in 1967, Five Brothers partners with commercial and residential mortgage servicers nationwide to provide regulatory-compliant default management and mortgage technology solutions that are strategically aligned with each client’s business needs and operating goals. Five Brothers offers a full range of field services, including property preservation, inspections, notary services, REO management, property valuation and a nationwide network of experienced customer and field service representatives. Advanced mortgage technology solutions include a complete document management and processing system (MARS), state-of-the-art loss mitigation software (MOTZ) and industry leading high-speed scanning, loan-level indexing and automated workflow management (IntelliStorage).
LPS Field Services
Solon, OH
More than 500 contractors
Preservation Services Offered: Securing, Lock Work, Lawn Service, Winterization, Debris Removal, Eviction Attendance, Pool Draining and Covering, Roof Tarps, Vehicle Removal, Sales Cleans, Window Replacement, Screening/Boarding Up, Water Pumping, Bid/Estimation, REO Repairs, Conveyance Preparation and Verification Non-Preservation Services Offered: Property Inspection, Occupancy Verification, Interior Inspection, Rush Inspection, Sale Date Inspection, Insurance Loss Draft Inspection, FEMA Inspection, Quality Control Inspection, REO Occupancy Status Inspection, Automated Value Model (AVM) Inspections, Manufactured Housing Inspection, 6 p.m. to 8 p.m. Occupancy Verification, Photo Documentation Company Overview: LPS Field Services (LPSFS) offers a comprehensive range of property inspection, preservation and REO services. As the nation’s leading provider of world-class, customer-centric field service solutions, LPSFS has 40-plus years of proven experience helping servicers preserve and protect their collateral assets through foreclosure and REO processes. Our extensive network of certified inspectors and contractors has the ability to continuously meet or exceed operational and financial performance objectives that are critical to servicer and investor success.
Mortgage Contracting Services
Tampa, FL
—
Preservation Services Offered: Property Inspections, Property Preservation Services, REO Property Maintenance Non-Preservation Services Offered: N/A Company Overview: For nearly 25 years, Mortgage Contracting Services has protected and preserved communities all across the nation. The company provides property inspections, property preservation and REO property maintenance for some of the largest mortgage servicers in the U.S. and its outlying territories. MCS has its own nationwide network of insured preservation vendors to improve workflow processes, mitigate risk and minimize costs in the time sensitive environment of default services. MCS has built its reputation on maintaining the highest standards of both customer satisfaction and compliance with regulatory requirements.
MSI
North Richland Hills, TX
1,200 maintanance and inspection vendors
Preservation Services Offered: Initial Securing, Re-Key and Lockbox, Trash Outs, Winterization, Snow Removal, Landscaping, Second Bids, Recurring Maintenance, Police Reports, Fire Damage Reports, Vehicle Removal, Eviction Assistance, Personal Property Posting, Property Repair Management, Evictions, REO Maintenance, Property Marketing, Letter Delivery, Property Inspections/Door Knocking, Occupancy/Name Verification, Insurance Loss Draft Non-Preservation Services Offered: Appraisals, BPO, REO Asset and Property Management Company Overview: For 27 years, MSI has provided the highest standards of quality and service within the mortgage industry. We have maintained these standards while providing cost effective solutions to our clients. We have been able to increase our clients’ efficiency and effectiveness by staying focused on training and quality control. Quality is of the utmost importance; we maintain consistent internal audits of our contractors, field representatives, agents, and in-house processors. MSI strives to be the best.
National Field Network
Lakewood, NJ
350-400
Preservation Services Offered: Securing, Winterization, Grass Cuts, Lock Changes, Window Boarding, Evictions, REO Property Management Non-Preservation Services Offered: Borrower Outreach Program, FHA Door Knocker Service, Violations Expedited, FHA Claims Filing and Audits Company Overview: National Field Network is a boutique field service and property preservation company that recognizes the need to change our services based on the needs of the individual lender, investor, or insurer. The management team each has 25-plus years experience in FHA auditing, property management, inspections, mortgage servicing, delinquency and foreclosure management and title clearing. We provide all services on a nationwide basis and we never feel a client is “too small” to work with. In addition, because of our extensive mortgage banking experience we fully understand the nuances of reverse mortgage servicing and FHA servicing.
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Company Name
Headquarters
Employees & Vendors
National Field Representatives
Claremont, NH
More than 5,000
Preservation Services Offered: Lock Changes and Lockbox Installation, Pool Securing and Maintenance, Roof Repairs/Tarping, Boarding, Winterizations, Sump Pump Repair/Replacement, Allow Access, Debris/Hazard Removal, Mold Remediation, Extermination, Lawn Maintenance, Snow Removal, Cash for Keys, Broom Swept Condition, Eviction Assistance, Utility Transfer, Trash Out, Sales Cleaning, Removal/Storage of Personal Property, Auto Removal, Shrub Trimming, Damage Report/Estimates, Court Appearance, Conveyance Condition Non-Preservation Services Offered: Insurance Loss Inspections, Broker Price Opinions, Vacant Building Registrations, Business Verification Inspections, Retail Outlet Verification Inspections Company Overview: With over 30 years experience, NFR provides accurate and timely residential property inspections and preservation, REO services, commercial property inspection, insurance loss draft inspections, BPOs, vacant building registrations, retail outlet verification inspections, and business verification inspections.
National Real Estate Field Services
Toms River, NJ
457
Preservation Services Offered: Everything from lock out to listing. We are a one-stop shop. Non-Preservation Services Offered: N/A Company Overview: NREFSI partners with local, regional, and national financial institutions that need a dependable field partner to provide prompt, accurate information for the origination, servicing, and collateral management aspects of its business. NREFSI believes in providing personalized services for our customers through flexible processes and reporting methods that utilize state of the art technologies. We have built a nationwide network of field service professionals that respond quickly and provide complete and accurate documentation of your collateral and servicing needs. Our commitment to our customers is simple; our pricing will be fair, our quality of service exceptional, and our integrity beyond reproach.
North American Property Preservation
Calabasas, CA
—
Preservation Services Offered: Pre-Foreclosure Inspections, Property Take Over and Asset Security, Trash Outs, Cleaning, Winterization, Recurring Maintenance, Pre-Sale Repairs Non-Preservation Services Offered: N/A Company Overview: NAPPCORP provides pre-foreclosure inspections, property take over and asset security, trash outs/cleaning, winterization, recurring maintenance, and pre-sale repairs on properties secured by defaulted and foreclosed loans. We use in-house field managers and crews to service clients. NAPPCORP crews provide clients with better and more consistent quality and timing of services so the lien holder can maintain the central focus of maximizing the value of the foreclosed property. We have a dedicated team of asset repair managers to provide customer-specific service and targeted response to each client’s needs. This contrasts with the call center approach generally utilized by other national companies.
Working together to rebuild America. Our revolutionary approach to property preservation has given asset managers and mortgage servicers across the country a reason to take notice. Our management team has decades of senior level experience as buyers of Property Preservation services, so we understand what you need. There’s no other company quite like us and we’re turning some heads. Unlike other companies who depend solely on subcontractors, we use our own team. That means better quality control for your properties. We train our people to your standards, control their schedule and ensure that all needed work is completed timely and at the highest quality. We also assign an Asset Repair Manager to be your single point of contact, dedicated to knowing your business and your unique needs. This saves you time, money and a lot of worry. For more information on our revolutionary approach to property preservation call 1-877-262-1543, or email us at: info@nappcorp.com.
reference Company Name
Headquarters
Employees & Vendors
NVMS
Manassas, VA
28,000
Preservation Services Offered: Repairs, Rehab Work, Trash Outs, Winterizations, De-Winterizations, Re-Keys, Lockbox Placement, BoardUps, Pool Maintenance, Lawn Service, Snow Removal, Sales Clean, Sign Placements, Bid Requests Non-Preservation Services Offered: Property Condition Reports, Property Maintenance Inspections, Quality Control Inspections, Occupancy Verifications, Drive-By Exterior Photo Service, Property Rehab Inspections, Loss Draft Inspections, Insurance Inspections, Evictions, Door Knocks, Delinquency Notifications Company Overview: NVMS is the nation’s most technologically advanced national property preservation and inspection company. Our custom designed, Web-based system allows our clients to place and receive preservation requests directly from their own database. This Web service, combined with custom iPhone apps for our field reps, provides the fastest response times in the industry today. NVMS can handle any preservation request that an REO division may have on a national basis with the most user-friendly applications in existence. By staying on the cutting edge of technology, NVMS provides the most efficient and effective management tools for any firm working with distressed assets.
Pacific Preservation Services
Thousand Oaks, CA
—
Preservation Services Offered: All REO and Property Preservation Services, Rehab, Mold, Eviction, Cash for Keys Non-Preservation Services Offered: National Vacant Property Registry, Utility Management, Property Management Company Overview: Pacific Preservation Services is a national property preservation company specializing in maintaining your assets during the foreclosure process through REO. With vendors in 50 states, PPS can handle assets anywhere in the U.S. With decades of experience in the real estate business, we can assist you in securing and protecting your assets until the property is sold. Trust a company that has your best interest in mind and maintain the integrity of our neighborhoods.
Reliance Field Services
Miami, FL
2,500
Preservation Services Offered: Property Security, Re-Key, Lockbox, Board-Ups, Winterization, Debris and Hazardous Waste Removal, Lawn and Pool Maintenance, Janitorial, Handyman Repairs Non-Preservation Services Offered: Field Calls, Collateral Inspections, Property Inspections and Preservation, Appraisals/BPOs, REO Disposition Company Overview: Reliance Field Services is a national full-service certified minority business enterprise that supports loss mitigation efforts through field calls, collateral inspections, property inspections and preservation, appraisals, BPOs, REO disposition and customized services designed to meet our client’s specific portfolio requirements. Since 1995, Reliance Field Services has been committed to providing timely and accurate information to our clients. In 2009, our executive management completed the requirements for SAS 70 Type II Certification, which is a widely recognized auditing standard developed by the American Institute of Certified Public Accountants (AICPA) for auditing and reporting on the effectiveness of operations, processes and controls.
REO Allegiance
Bayonne, NJ
6,500-7,000 contractors
Preservation Services Offered: Debris Removal, Locksmith/Property Securing and Boarding, Winterizations, Mobile Home and Automobile Removal, Roof Repair and Roof Tarping, Pool Securing and Maintenance, Initial and Recurring Lawn Care, Mold Remediation, Safety and Hazard Removal, Rehab and Minor Repairs, Custom Maintenance Programs, Single-Fee Maintenance and Eviction Programs Non-Preservation Services Offered: Cash for Keys Management, Vacant Property Registration and Code Violation Management, Occupancy Status Reporting, National Eviction Services Company Overview: REO Allegiance is a woman-owned nationwide property preservation and eviction company. REO Allegiance represents a model of exceptional service, firm accountability and precise attention to detail. We will customize any of our existing services to create a maintenance solution designed specifically to meet our clients’ current and future requirements. We offer custom maintenance flat fee programs, a la carte maintenance services, nationwide eviction services and vacant property registration. At REO Allegiance, we are dedicated to providing you with services that most effectively protect your interests, saving you time and money. At REO Allegiance, we are committed to your success.
Safeguard Properties
Valley View, OH
815 employees and more than 2,000 contractors
Preservation Services Offered: Property Inspections, Property Preservation, REO Services, Hazard Claims Services Non-Preservation Services Offered: Title Services, Valuations, Insurance Loss Inspections Company Overview: Safeguard Properties is the largest privately held mortgage field services company in the U.S. Founded in 1990, the company inspects and maintains defaulted and foreclosed properties for mortgage servicers, lenders, investors and other financial institutions. Safeguard’s success and reputation are built upon a fundamental commitment to customer service. All services are provided in accordance with client criteria and applicable investor/insurer guidelines.
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Regional firms Company Name
Headquarters
Employees & Vendors
Buczek Enterprises
Derby, NY
More than 125
Preservation Services Offered: Allow Access, Auto Removal, Bid Approval, Boarding/Securing, Carpet Removal and Installation, Code Violations, Debris Removal, Demolition, Eviction Services, General Repairs, Grass Cuts, Hazards Removal, Home Improvement, Initial Securing, Lock Changes, Personal Property Removal, Photos to Validate Work, Plumbing, Prepare for Conveyance, Property Inspections, REO Initial Services, Roof Tarp Repair and Replace, Sales Clean, Seizure Services, Special Projects, Systems Check, Utility Transfers, Window Glazing, Winterizations Non-Preservation Services Offered: Property Management Company Overview: Buczek Enterprises specializes in providing quick, reliable preservation and inspection service to homes throughout Western New York, California, Georgia, Florida and Pennsylvania. Buczek Enterprises is a family owned business that has provided top quality service since 1978. Our goal at Buczek Enterprises is to earn the right to do business with our clients every day. We supply superior client service through Web-based data transfer, full file data access and work in progress information, on demand. Our licensed contractors take pride in providing the best, most accurate and timely property preservation and inspection work available in our coverage areas. Regions Served: California, Florida, Georgia, New Jersey, New York, Pennsylvania
DC Properties of Arizona
Phoenix, AZ
175
Preservation Services Offered: DC Properties can take a property from end to end. We perform all preservations services associated with any property. Non-Preservation Services Offered: DC Properties is a licensed general contractor and can do all repairs and rehabilitation needed to bring the property into market ready condition. Company Overview: DC Properties is a property preservation and repair company. Our services include property inspections, property preservation, REO property maintenance, repairs and more. DCP strives to exceed your expectations. DCP’s success is the result of our dedication and focus on building long-term relationships with our clients, based solely upon quality work, expedited turnaround times and trust and integrity. We strive to hire only the best people who are committed to providing exceptional service and who share our same values. DCP serves some of the industry’s largest companies. We look forward to building a relationship with you and serve you as well. Regions Served: Arizona, Texas, New Mexico, Nevada
DEPENDABLE • ACCURATE • PROMPT
Your TOTAL
Real Estate Field Service Company NREFSI partners with local, regional, and national financial institutions that need a dependable field partner to provide prompt, accurate information relating to its origination, servicing, and collateral management aspects of its business. Based upon our experiences, we created a single resource center that provides field support for originations, servicing and collateral management.
Contact us today at: 800.723.0788 or admin@nrefsi.com
Visit us at: www.nrefsi.com National Real Estate Field Services Inc.
before & after
Twin Cites, Minn.-based
Energy REO Solutions
(ERS) was responsible for the property preservation work on this Lanham, Md. property. In addition to the complete bathroom renovation (including replacing the green toilet), ERS repaired and renovated nearly every aspect of the house.
44 HW FoCUS // propert y preservation
Celebrating
20 years
of Safeguarding our clients’ interests
A lot has changed since Safeguard was founded twenty years ago.
our collective voices to bring needed change around important issues that affect us all.
We’ve grown from a company of two into the largest independent mortgage field services company in the U.S.
And despite all that’s changed — the essential mission of Safeguard has remained the same — to safeguard the interests of our clients.
We’re part of an industry that has grown too — in ways none of us could ever have imagined. Together, we’ve worked to meet unprecedented industry challenges — establishing industry best practices and finding better ways to protect properties, neighborhoods and entire communities.
That was our commitment when we were founded. It is our commitment today. And it will be our commitment for the future. It is our honor to celebrate twenty years of successful partnership with our 800 employees, our clients and all of our industry colleagues.
We’ve raised awareness of our industry to the outside world. And we’ve raised
Customer Service = Resolution www.safeguardproperties.com 800 852.8306 p
Property Preservation · Property Inspections · REO Services Hazard Claims Services · Insurance Loss Inspections · Valuations · Title Services
Would you expect a field service provider to manage your conveyance and your claims? Now you can. With the industry’s only integrated field service and claims management solution, costly delays and communication gaps are a thing of the past. The combination is auditable, accurate and streamlined to help you avoid missed deadlines and potential penalties. If you’re depending on individual companies to provide field services and manage claims, your risk is greater than it needs to be. To learn more about CoreLogic Field Services and Claims Management, call us at 1.800.873.4532 or visit corelogic.com/fieldclaims
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