Attended by hundreds of professionals from the field service and mortgage default industry, the 9th Annual National Property Preservation Conference was held earlier this month in Chicago. The popular conference featured a number of interesting panel discussions and keynote addresses highlighting the economic outlook for 2013 and the impacts on property preservation. As has been the case since its inauguration, the conference title sponsor and coordinating organization was Safeguard Properties.
Safeguard’s founder, Robert Klein, opened the conference with formal greetings and appreciation for the other numerous sponsors of the event, which included Mortgage Servicing News and many field services companies. He also thanked the myriad of people involved in coordinating and staging the event, and the attendees for coming to the annual conference. Klein offered his prayers and thoughts on behalf of the collective audience regarding the millions of victims on the East Coast who have been impacted and in many cases devastated by Hurricane Sandy and the subsequent snow storm that hit the same area soon after. A special session was held that day to reflect on what transpired following Katrina in the Gulf, and what the field services industry can expect with regard to the impacts from Sandy. Klein had just recently returned from visiting the stricken area and reported just how overwhelming the situation is, particularly in New Jersey and New York.
A distinguished panel of industry experts that included Jodi Cornish, vice president of Premier Asset Services, Rick Sharga, executive vice president of Carrington Mortgage Holdings, Ivory Hines from the Department of Housing and Urban Development, Alfred Pollard, general counsel from the Federal Housing Finance Agency, Bob Hora from Bank of America, and Robert Klein, discussed the state of the industry. The panel was expertly moderated by Ed Delgado, COO of Wingspan Portfolio Advisors.
Delgado started off the discussion by stating that politics in housing arena doesn’t really resolve issues.
“We have all come together here to understand best practices and learn concepts to help preserve homeownership, among other issues,” he said.
Delgado, who is a fixture at many default servicing industry conferences and seminars, continued by asking Pollard, “With the national election concluded, what do the results mean for our industry? Does it mean four more years of the same thing, aggressive protectionism aimed at helping consumers or what exactly?”
Sharga offered that it most likely means a continued slow recovery, stating that the “fiscal cliff” is the elephant in the room. Hines noted, unofficially, that FHA is becoming the new subprime with a higher market share than ever, but the focus at HUD is on foreclosure prevention and enhanced oversight of servicers. Pollard also stated that he is hopeful that more agencies and individual states will work more closely together. Adding to this, Klein said that there is a disparity of regulatory efforts and that the entire default servicing industry needs to standardize servicing guidelines. Sharga said that foreclosure timelines in general need to be streamlined, especially with regard to vacant properties.
“Extended redemption periods and backed up courts in judicial states are further exacerbating timelines,” said Sharga. “The industry should look for opportunities standardize timelines.”
While Hora indicated the short sale process has been greatly improved throughout the industry, and believes the trend will be toward more short sales over the next few years, Sharga pointed out that the debt forgiveness law is about to expire and this could negatively impact the desirability for borrowers to seek a short sale.
A great deal of discussion focused on the impact of vacant properties across the country, and the panelists were universally in favor of municipalities accelerating the foreclosure process to protect the neighbors’ property values and more quickly address health and safety issues. They also all agreed that using the term “fast-tracking” of foreclosures has a negative connotation among borrowers and others who do not understand that this is targeted toward vacant properties only and that “Snidely Whiplash” isn’t trying to kick people out of their homes. Klein interjected here that most code enforcement personnel don’t know the difference between a property that is in pre-foreclosure or post-foreclosure, and they don’t really care.
“All they know is a property is in bad condition and it is contributing to blight and they want the condition fixed,” said Klein.
Cornish indicated that her organization’s disaster preparedness team met in Newark some time ago and put into place a specific plan for such events as the mega-storm that slammed the east coast recently. She said her team makes case-by-case evaluations in order to help avoid making bad decisions during a crisis like that caused by Sandy.
Sharga pointed out that foreclosures have stopped in the areas most affected by the storm, which is only decent and proper.
The panel also touched on moral issues related to the increase in strategic defaults. A rhetorical question was asked: What ever happened to the sanctity of contracts? It was noted by Pollard that bankruptcy used to be a very bad thing, but is now readily accepted as a financial planning tool. He also stated that Thomas Jefferson and Alexander Hamilton, who rarely agreed on anything in public, shared the conviction that home ownership is critical to the country and is tied to civics and the law, because a tie to land ties you to government. It was stated that home ownership has declined to 65% from a high in 2007 of 70%; still a pretty significant number, but dropping nonetheless.
Near the end of the panel discussion, Sharga asked, “What does homeownership mean today to a transient nation? Are we changing our beliefs? Has the American dream ended?” He then stated that the majority of people in this country still want to own a home someday, noting that the younger generation has not yet opted to buy because of job uncertainty and because they saw the massive amount of foreclosures that have taken place, which has made them leery of buying now. Sharga wryly noted, however, that whether people own or rent, most prefer to live indoors, which drew laughter from the attendees.
The takeaway from this particular panel discussion was that it is up to the members of the housing, mortgage, and default servicing industries, of which field services providers are an important part, to get America back on the road to a real housing recovery rather than the somewhat artificially created one we have been experiencing, if we want to see the economy begin to show sustained growth.