PERSON OF THE WEEK: It's been almost one year since the omnibus Helping Homeowners Save Their Homes Act was signed into law. To learn how the mortgage servicing community has handled new duties relating to the legislation's tenant protections laws, MortgageOrb.com caught up this week with Mortgage Contracting Services CEO Caroline Reaves.
Q: As we approach the one-year anniversary of last May's Protecting Tenants at Foreclosure Act (PTFA), how would you assess the industry's response to the legislation?Â
Caroline Reaves: The industry's response to the PTFA has been one of quick-acting adaptation. Servicers, attorneys and field service companies have collaborated from the beginning to understand the legislation's actual, intended provisions. Over the course of the last 12 months, the industry has instituted new standard operating procedures to fulfill the act's requirements.
The volume of affected tenants has been relatively small thus far, which has brought about a collective sigh of relief from industry stakeholders. The low volumes have given servicers a chance to digest their new role as landlords, introduce their new procedures for handling tenants and adjust where necessary. With existing networks of inspectors and maintenance contractors, field preservation companies are the logical choice to assist the new landlords with their tenant maintenance needs.
Urgent situations at tenant-occupied properties must be approached differently than those of a vacant REO property. Field service companies needed to create new methods for tenants to communicate with them for situations requiring immediate attention, such as faulty heating units and leaking roofs. Situations that previously could be handled the next day now need attention within hours.
Q: Which pieces of the legislation has the industry had the toughest time digesting?Â
Reaves: The landlord-tenant legislation has no doubt created challenges for the industry. From defining a bona-fide tenant and a valid lease, to the landlord responsibilities, the Act has tested the industry's resolve.Â
Perhaps the greatest challenge is identifying those occupants who have valid leases and communicating with them their options with respect to the Act. The curiously low volume of tenants performing under the lease provision may suggest that a sizable population of eligible tenants are not taking advantage of what the Act provides.
Through discussion forums, conference panels and input from the national attorney network, servicers, banks, investors and all stakeholders have collaborated to work through the not-so-clear provisions. The industry continues to work through these by taking into consideration not only the rights of the tenants, but their well-being, as well.Â
Q: Blight code compliance remains top of mind for servicers. How are servicers improving their communication with code-enforcement officials?Â
Reaves: Code compliance within municipalities across the nation has been nothing less than a sweeping effort. Servicers have beefed up their code compliance/high-risk departments to accommodate the ever-changing environment. In conjunction, the major field service companies not only participate in the national code-enforcement conferences, but also take part in the regional code-enforcement summits. The goal is to establish an outreach program in which the field service companies engage with the code-enforcement community in an attempt to educate code-enforcement officials about the default servicing industry.
Field service companies interact with the code-enforcement community on a daily basis and communicate information back to servicers. They act as the eyes and ears for servicers, and their contractors' local knowledge and relationships enable them handle issues at a community-specific level.Â
Q: How has the relationship changed over the past few years?Â
Reaves: The relationship with the code-enforcement community has improved dramatically. Many field service companies have continuous, constant contact with literally hundreds of code-enforcement representatives across the country. Historically, code-enforcement officers' primary dilemma was discerning who the responsible party was when code violations arose. The relationships have now evolved to that of a partnership. All stakeholders today are aware that they are fighting the same battle in stopping neighborhood blight.
Q: The Department of Housing and Urban Development (HUD) recently stated its intention to create a single conveyance system that will cover the entire country. What are your thoughts on this announcement, and what does it mean for servicers?Â
Reaves: When HUD announces plans that will affect the conveyance process, it gets the industry's attention. Our hope is that the new P260 system will increase efficiency and consistency for managing FHA-insured properties from having a single communication technology and one national Mortgagee Compliance Manager.
Q: Servicers and investors are eager to truncate the property preservation approval process. What is being done to shorten the time frame between initial bidding and final approval?Â
Reaves: Servicers and their field service companies are acting in a more proactive manner to anticipate marketing and management (M&M) contractor trends and requirements. Oftentimes, if an M&M requires a second bid on a specific item that is outside of the requirements of the HUD Property Preservation Guide, the field service company will automatically provide a second bid.
Technology has played – and will continue to play – an integral role in the streamlining of this process. Information systems "speaking" directly to one another can alleviate much of the time historically spent on the manual uploading of information into multiple systems.
Q: How do the average time frames of today compare to those inÂ years past?Â
Reaves: The average time frames have been significantly reduced, primarily due to automation. Many of the field service companies have introduced home-grown software that will pre-populate information directly into over-allowable and time-extension requests. This intuitive technology allows for field service companies to increase the amount of requests submitted on a daily basis.