Law Creates Demand For Program
Carrollton, TX-Specialty servicers are responding to market demand for solutions to the problems for lenders, investors and servicers that arise from the Protecting Tenants at Foreclosure Act, signed into law earlier this year.
One such solution is the National Residential Property Receivership Program launched by Wingspan Portfolio Advisors here, a mortgage servicer specializing in highly delinquent loans, and the American Legal and Financial Network, a national network of mortgage banking and legal professionals.
Both parties agree this legislation presents the financial services community with many new and potentially dangerous risks related to servicing certain types of residential properties, and creates an additional layer of duties that lenders, investors and servicers are ill-equipped to undertake when foreclosing on properties.
"When borrowers own property, they are required by the lender to make payments and maintain insurance to safeguard the home," explains William LeRoy, president and CEO of AFN.
"Under the new legislation, when lenders take the property back, many new responsibilities shift to them. They include duties to tenants, who are often the previous owners, and to local municipalities, which impose penalties if the real estate is not properly maintained."
Mr. LeRoy says the requirements of the new legislation have heightened the responsibilities and legal risks of investors, servicers and lenders, who are generally not prepared for them. In most states, courts may appoint receivers to perform the requisite duties, and the new national residential receivership program has been created to specialize in assuming these responsibilities and safeguarding the interests of financial institutions.
Receivers stand in the shoes of the lender and administer the needs of the property, says Steven Horne, CEO of Wingspan Portfolio Advisors.
"They are often the best option for lenders when faced with the challenges of servicing tenant-occupied properties, impaired or abandoned houses, or properties with unfinished construction," he said.
Wingspan has created a residential receivership department and utilizes its preferred attorney network relationship with the AFN, as well as its own property management capabilities, to ensure that any investor, lender or residential loan servicing company's needs under the new rules are met.
Mr. Horne says the legal and regulatory demands of applicable city, county and state governments are frequently beyond the expertise of property managers and nonspecialist loan servicers.
Mr. LeRoy notes that the program can assist lenders and servicers in a majority of the foreclosures around the country.
"Courts will experience tremendous demand for qualified receivers to help prevent communities from becoming blighted and keep properties in safe, saleable condition," Mr. LeRoy said.
"Bringing together the servicing and legal skill to provide focused, expert receivership capabilities makes tremendous sense in the effort to safeguard tenants, preserve communities and ensure compliance for all parties with these challenging laws."