Communication Improves with Code Enforcement Officials

Relationships are changing between field-service companies, asset managers and code enforcement officials.

Companies like Lender Processing Services are working with local code enforcement groups and engaging local resources to better communicate about the latest legislation, including vacant property statutes that are impacting the REO market and individual communities.

Rob Hicks serves as vice president of industry relations and risk management for LPS Field Services Inc. and LPS Asset Management Solutions Inc. Based in Cleveland, his role cuts across both organizations, presale and post-sale.

In recent years, Hicks has traveled to many key markets, especially to cities where code violations were higher than others like in Detroit and Cleveland. “It was effective but inefficient. Even on my best days, trying to meet with three different cities is difficult,” Hicks tells Managing REO.

He believes field-services companies and asset management companies are uniquely positioned to interact with local code enforcement officials.

LPS utilizes local networks of brokers and agents as well as property preservation contractors. Oftentimes, they assist LPS during meetings with compliance officials and they reach out to LPS when they know or hear about local issues pertinent to REO.

“Field service and asset management companies have the corporate contacts who read the paper every day. They know in a particular neighborhood there is a huge problem with blight,” he says.

“We can track legislation but to get a phone call about a city council meeting that will discuss a new piece of legislation that will drastically alter the way you do business is a powerful source of information for us. It is a daunting task to track multiple pieces of not only nationwide but in one city.”

Dealing with these laws on the front end rather than reacting on the back end is advantageous for both lenders and for the city, he said.

Over the past year, LPS has created a forum where code enforcement officials can interact and meet with people in the default servicing industry. He says that meeting face-to-face and bringing a large amount of local officials together with industry experts is very effective. It provides a purpose to create relationships with a focus on the code enforcement officers who are out in the field getting to meet the asset manager or field-service official that is responsible for code violations.

“We tested the waters with just LPS and were successful in California. We had 40 attendees representing 15 localities. In Fort Lauderdale, there were 300 officials and 65 municipalities,” Hicks recalls.

“What makes the most sense is that it’s not just an LPS meeting. We want to hold more in various parts of the country and the focus on markets where there are bigger problems. It includes all of our competitors. Creating an industrywide event enables us to create relationships with the people who handle the day-to-day enforcement for the cities, matching or pairing them up with the default servicing industry—those who handle the day-to-day issues relating to the property. Both parties can resolve issues where mediation is needed. They walk out with relationships that help them do their job every day.”

Vacant property registration statutes continue to be the most prolific pieces of legislation these days. They come with accompanying property preservation requirements, which focus on the presale and post-sale sides of the business. “The presale side is the more difficult side because it’s a bit ambiguous as to who actually owns the property. That’s one of the tough questions. Much of the legislation has evolved over time to broaden the definition of owner.” Across the country, asset managers and field-service vendors are working hard to preserve properties and market them. Local inspectors, property preservation contractors and local real estate brokers are the people who are vested in their communities, Hicks says.

“Now in addition to preserving properties in accordance with your client’s guidelines you are also trying to maintain community standards. If you talk to cities, their main goal is to maintain the community standards. That is what’s difficult because those differ. A standard in Detroit might be vastly different than a suburb in Orange County. At times it can conflict with guidelines that the investors put forth.”

Because of the positive changes taking place, he says going forward everyone will be better equipped to resolve issues.

“The biggest complaint from local officials has been the inability to communicate with the banks and/or the people who are servicing these properties. It goes beyond that even to include the inability to communicate with the local landlord and pull them into court to enforce these laws,” he adds.

“When you’ve gotten to that point, it’s already too late,” he said. “The property is already outside of the community standards. By working with the default servicing industry, you can communicate before it goes that far.”