With estimates that more than 10 million properties stand vacant across the country, growing numbers of cities have either enacted or are considering vacant property registration ordinances to combat the problems that vacant and abandoned properties cause. Safeguard Properties currently tracks almost 800 ordinances in effect across the country, each with its own rules, requirements, fee structures and penalties.
With more effective outreach to municipalities and better internal processes, servicers can minimize their risks of code violations and stiff penalties, and build stronger relationships with code enforcement departments to protect the condition and value of properties in their portfolios.
Effective systems and processes
Internally, servicers should identify a single point of contact within their organizations for cities and community groups to address and resolve complaints quickly. Servicers also can utilize a code enforcement management system to streamline the management of large volumes of properties.
Safeguard’s Compliance Connections is such an example. An effective communications management system provides a portal for municipalities and servicers to post, manage, update and resolve code issues on large volumes of properties quickly and efficiently.
Experience with code enforcement procedures
When code violations occur, it is critical that servicers have experienced negotiators who understand the code enforcement process and can communicate with municipalities to prevent fines from accruing and even work to reduce them. An advocate with knowledge of servicing standards and code requirements can be an important bridge with code enforcement officers to extend grace periods, suspend enforcement actions, and facilitate concessions that create mutual benefit for servicers and cities.
Servicers must follow specific guidelines, schedules and delegated authority for loans serviced on behalf of government investors and government-sponsored enterprises. When guidelines do not include provisions for the code requirements of a specific municipality, servicers must seek prior approval to receive reimbursement. Servicers must implement a detailed records and documentation process to facilitate reimbursement decision-making and assure that they receive the highest levels of reimbursement for their services.
Outreach and dialogue
Despite their unique challenges, servicers and municipalities share a common goal to protect properties and neighborhoods. Outreach and dialogue between the mortgage industry and municipalities has helped each side understand the other’s struggles.
Through organizations such as the American Association of Code Enforcement and individual state code enforcement groups, Safeguard and other field service companies have helped to identify solutions to minimize code violations on behalf of their clients. Servicers as well have participated in sessions and roundtable discussions with state and local code enforcement officials.
By working as true partners, the mortgage industry and municipalities have come a long way in developing tools and systems that protect property values and communities. The dialogue must continue.