Welcome to the 5th Annual

National Property Preservation

Conference

Rising to the Challenge

Conference Planning Committee • Leslie Bromer, HUD

• Sarah Martin, HUD

• Kim Hobson, Freddie Mac

• Carrie Ehinger, Countrywide

• Rob Rybarczyk, Bank of America

• Kim Krakoviak, Citi

• Tracy Hager, First American

• Caroline Reaves, MCS

• Lorne DuFour, MCS

• Nickie Bigenho, MCS

• Robert Shekell, ZC Sterling

• Erica Unger, Safeguard Properties

• Greg Robinson, Safeguard Properties

• Vicki Vidal, MBA

• Mike Frueh, VA

• Carl Wasson, VA

• Deb Oakley, National City

• Jane Rhoades, Midland Mortgage

• Jack Evans, Chase

• Ann Lewis, HSBC

• Candace Fraley, Hooks Van Holm

• Sherilee Massier, Wells Fargo

• Kellie Beyer, Safeguard Properties

• Mary Stewart, LPS Field Services

• Jason Behrs, Superior Home

• Robert Klein, Safeguard Properties

Conference Topics

• Industry challenges

• Foreclosure prevention

• Asset collateral preservation

• REO disposition

• Property preservation costs

• REO statistics

• Brokers vs. national property preservation providers

• Initial services and ongoing preservation work

• REO best practices

• REO repairs

• Marketability enhancement

• Lendable condition

• Violations and ordinances

• Neighborhood stabilization

program

• Protecting our communities

• Vacant property registration

• MERS initiative

Agenda - Day 1

Time Session

8:45 - 9:00 Opening Remarks: Mr. Vance Morris, HUD Director of Single

Family Asset Management

9:15 - 10:15 Industry Update

10:15 - 10:30 Break

10:30 - 12:00 Investor Update - HUD

12:00 - 1:15 Lunch

1:30 - 2:45 Investor Update - HUD (continued)

2:45 - 3:00 Break

3:00 - 3:45 Investor Update – VA/FNMA/Freddie Mac

3:45 - 5:30 REO

5:30 - 6:30 Servicer Roundtable (Cabinet Room)

Opening Remarks

Vance Morris, HUD Director Of

Single Family Asset Management

Industry Update

Industry Update Moderator:

Deb Oakley, SVP Homeownership Preservation

National City Mortgage

Panelists:

– Vicki Vidal, MBA Senior Director

– Laurie Maggiano, HUD Deputy Director, Office of Single Family Asset Management

– Mike Frueh, VA Assistant Director for Loan Management

– Rob Caire, Fannie Mae Vice President for Credit Loss Management Operations

– Kim Hobson, Freddie Mac Senior Default Specialist

– Joe Schilling, VA Tech Professor and Director of Research and Policy: National Vacant Properties Campaign

– Caroline Reaves, MCS President and COO

– Robert Klein, Safeguard Properties CEO

Session Overview

Industry leaders discuss critical issues faced

as foreclosures mount and public

and governmental scrutiny increases

Industry Challenges

• Key initiatives and activities that the

industry is deploying to address:

1. Foreclosure prevention

2. Maintaining asset collateral value (pre- and post-sale)

3. REO asset disposition

Foreclosure Prevention

• Increase borrower contact (HOPENOW

Alliance)

• Expand outreach efforts to include:

– collections

– foreclosure

– customer service

• Simplify loan modification/workout process

Outreach and Counseling

Asset Collateral Preservation

Protecting and Preserving Asset

Values

• Pre-sale/post-sale maintenance of vacant and

abandoned properties

• Investor compliance (HUD, FNMA, VA,

Freddie Mac)

• Code compliance

REO Disposition

REO Disposition

• Neighborhood Stabilization Grant Program ($3.9 billion)

– Developing action plans

– REO gifting, communicating with CDCs, and creating land banks

• Alternative disposition

– Auctions

– Bulk sales

• Neighborhood stabilization tools

– Vacant Property Registration

– Code enforcement

– Maintaining neighborhood values

– Alternative disposition methods

• Potential impact from federal bailout

What Does the Industry Spend

on

Preservation Activities?

Snapshot: YTD P&P Costs

Estimated Spending on Pre-Sale Properties $334 million

Estimated Spending on REO Properties $899 million

Total Spending (through 9/30/08) $1.23 billion

* Numbers are based on an estimated average inventory of 2.8 million pre-sale properties and 608 thousand REO properties.

** Data represents preliminary estimates based on the results from an MBA property preservation expense survey.

Total Annualized Spending $1.64 billion

Snapshot: YTD Pre-Sale

Property Inspection Costs

* Numbers are based on an estimated average inventory of 2.8 million pre-sale properties.

** Data represents preliminary estimates based on the results from an MBA property preservation expense survey.

Est. Spending on Pre-Sale Inspections (through 9/30/08) $167 million

$222 million Total Annualized Spending on Pre-Sale Inspections

Break

10:15 a.m. – 10:30 a.m.

Sponsored by Superior Home Services

Coming Up: Investor Update - HUD

Investor Update: HUD

Moderator:

Leslie Bromer

HUD Senior Housing Policy Specialist

Panelists: – Marlene Robinson, HUD Principal GTR

– Jack Evans, JPMorgan Chase Operations Manager

– Sherilee Massier, Wells Fargo P&P Manager

– Robert Klein, Safeguard Properties CEO

– Kellie Beyer, Safeguard Properties P&P Operations Manager

– Caroline Reaves, MCS President and COO

– Tracy Hager, First American VP of Client Initiatives

Investor Update - HUD

HUD Vision

and

Guideline Compliance

HUD’s Top 10 P&P Issues

1.) Requiring bids for nominal amounts

– Mortgagee Letter 2008-31 provides that bids not

be requested for items that are $250.00 or less.

2.) Original signatures

– Mortgagee Letter 2008-31 now provides that

extension and overallowable requests may be

submitted via email, but must include a full audit

trail

3.) Winterizations

– ML 2008-31: plumbing and heating systems must be

drained in a manner sufficient to prevent freeze and/or

other damage

– Actual damage must occur for demand letter to be issued

4.) Vacancy Issues

– Property is not occupied, but has a For Sale sign

– Property is not occupied, but there appears to be

personal property inside the structure

– First Time Vacancy (FTV)

5.) Conveyance of damaged properties without

M&M approval

6.) Insurance recovery

7.) Utility liens

8.) Extension and OA requests

– Incomplete submissions

– Duplicate submissions

– Multiple submissions of different OA items for the

same property

– Misdirected submissions

9.) Property condition at the time of

conveyance

10.) Mortgagee quality control

Lunch

12:00 p.m. to 1:15 p.m.

• Coming Up: Investor Update – HUD (continued)

Sponsored by MCS

Servicers’ Top 5 HUD Issues

1.) Turnaround times

– Calendar vs. business days

– Timely response to overallowable and extension

requests

– Escalation process for non-responsiveness

2.) Bid Requirements

– Bids required for published allowables if total cost has been exceeded (grass cuts, boarding, winterizations)

– 2nd bids requested even if initial bid provided in accordance with HUD pricing matrix (more than 6 tires, oversized pools)

– Debris allowable limited by cubic yard measurement (bricks, swing sets)

– Guidelines require re-glazing, but no published allowable defined

– Bid approval after the fact for non-emergencies

3.) Denials and Appeals

– Mortgagee vs. mortgagor neglect

– Detailed reasoning of denied overallowable/cut bids

– Bids denied for technical non-compliance not impacting

property condition

– Appeal process does not provide for time extension

denials

– M & M response delays and extension requests

4.) Property Damages – Insurance claims required for damages even if below

policy deductible

– Mortgagee neglect needs to comprehensively defined and uniformly applied across regions

– Servicer held responsible for damages caused by mortgagor neglect

– Is mortgagee responsible for completing unfinished renovations prior to conveyance?

5.) Documentation

– Servicers need clarification and uniformity on

documentation requirements

Break

2:45 p.m. – 3:00 p.m.

Coming Up:

Investor Update – VA/FNMA/Freddie Mac

Sponsored by Safeguard Properties

Moderator:

Robert Klein

Safeguard Properties CEO

Panelists: – Elonda Crockett, FNMA Asset Recovery Manager

– Carl Wasson, VA Supervisory Loan Specialist

– Kim Hobson, Freddie Mac Sr. Default Specialist

– Sherilee Massier, Wells Fargo P&P Manager

– Caroline Reaves, MCS President and COO

– Tracy Hager, First American VP of Client Initiatives

Investor Update: FNMA,VA,

and Freddie Mac

Fannie Mae

Fannie Mae Update

• Improving communication with servicer and

field service partners

• Release of new overallowable guidelines and

reference guide

• Web-based technology Home Telos

(HomeTracker) to streamline bid approval

process

• Requirements for submitting 1095 request

• Are expenses reimbursable if OA approval is

not received?

• Are the costs for services reasonable and in

line with items to be completed?

• Hazard insurance filing/recovery

VA

VALERI

• VA Loan Electronic Reporting Interface

– More loss mitigation incentives

– Less VA intervention

– Servicer control over timeframes

– No buy downs, just write-offs

VALERI: Electronic Reporting

• Mostly transparent

• Full file reporting

• VA event interpreter translates

• Occupancy status change automatic

• Some events reported in servicer Web portal

• Claims data semi-automated

VA P&P Issues

• VALERI fees & cost schedule

• Interior inspections on abandoned properties

• Access to vacant properties for appraisals

• New PM contractor

Freddie Mac

Freddie Mac

• Hurricane Ike foreclosure moratorium in

federally-declared disaster areas

• Loss mitigation efforts

• P&P issues

- Enhanced over allowable expense thresholds

- Vacant property inspections

Break

3:15 p.m. to 3:30 p.m.

Coming Up: REO

REO

REO Moderator:

Robert Klein, CEO

Safeguard Properties

Panelists:

– Jay Kingsley, HSBC

– Marc Hinkle, PHH

– Elonda Crockett, FNMA

– Sherilee Massier, Wells Fargo

– Kathy Cogan, Safeguard Properties

– Caroline Reaves, MCS

– Mary Stewart, LPS

REO Key Topics

• REO Statistics

• Preserving the REO Asset

• Disposition Options

• High Risk Items

REO Statistics

REO Filings by QTR

0

20,000

40,000

60,000

80,000

100,000

120,000

4th

Qtr 05

1st

Qtr 06

2nd

Qtr 06

3rd

Qtr 06

4th

Qtr 06

1st

Qtr 07

2nd

Qtr 07

3rd

Qtr 07

Quarter

To

tal

Existing Home Sales by Region - Seasonally Adjusted

800000

1800000

2800000

3800000

4800000

5800000

6800000

Date

An

nu

al

Rate

of

Sale

s

U.S.

Northeast

Midwest

South

West

2004 2008 2009 2007 2006 2005

Seriously Delinquent (90 days + FC inventory) Prime Loans

0

0.002

0.004

0.006

0.008

0.01

0.012

4Q-05 1Q-06 2Q-06 3Q-06 4Q-06 1Q-07 2Q-07

Date

Rate

in

%

Seriously Delinquent (90 days + FC inventory) Prime Loans

Seriously Delinquent (90 days + FC inventory) Sub-prime

Loans

0

0.01

0.02

0.03

0.04

0.05

0.06

0.07

0.08

0.09

0.1

4Q-05 1Q-06 2Q-06 3Q-06 4Q-06 1Q-07 2Q-07

Date

Rate

in

%

Seriously Delinquent (90 days + FC inventory) Sub-prime Loans

Preserving the REO Asset

Brokers vs. National

Preservation Providers

• Separation of responsibilities

• Streamlining and centralizing processes

• Communication

• Quality control measures

• Turnaround times

• Cost factors

Initial Services

• Securing

• Trashout and maid services

• Initial grass cut and landscaping (curb

appeal approach)

• Winterization

Maid Services

• Wiping down counters, window sills,

cabinets

• Mopping hard-surface floors

• Vacuuming carpets

• Cleaning bathrooms

• Goal is to have the property in

“marketable condition,” ready to be shown

to potential buyers

Ongoing Property

Management Services

• Bi-monthly grass cuts to maintain curb appeal

• Monthly maid refresh to ensure optimal

presentation to potential buyer

• Re-securing and debris removal (if necessary)

• Winterizations and de-winterizations

• Snow removal as needed

REO Best Practices

• Open Communication Communication between broker and field services provider imperative to

ensure success

• Marketable Condition and Curb Appeal Maid services and upgraded landscaping services are essential to ensure

competitive positioning of an REO property comparable to traditional homes for sale in the neighborhood

• Marketability Enhancement Cost effective upgrades that greatly enhance the value of the property and

provide reasonable return on investment (paint, floor covering, counter tops, appliances)

Disposition Options

Repair or Sell As-Is?

• Several key determining factors

– Market value

– Local competition

– Investor preference

Cosmetic Repairs

• First impressions make or break sales

• Cost effective interior items like new paint or

carpeting greatly add to marketability

• Cost effective exterior items like painting,

mulching, new plantings, etc. greatly improve

curb appeal

Marketability Enhancement

• Focuses on investment in properties to ensure

comparability to competitive properties in the

community

• Includes investment options for property refresh:

– painting

– carpeting and flooring

– landscaping

• Enables clients to target investment with

properties where there is a reasonable return on

investment for the activities

• Provides opportunity to upgrade homes at a cost

effective investment for the purpose of shortening

the sales cycle

Lendable Condition

• Impact to sales price

• Impact to market time

• Decision-maker on whether to rehab (broker,

asset manager)

• Quality of materials used

High Risk Issues

HOA Violations

• Who is responsible?

• Common violations

• Prevention

• HOA relationship-building

Code Violations and City

Ordinances

• Building relationships with code enforcement

offices and officers

• VPR initiatives

Thank You

Servicers, please join us for the Roundtable

Discussion at 5:30 p.m.

Everyone, please join us at 6:30 p.m. for

our evening reception.

Dinner is at 7:30 p.m., followed by entertainment

provided by extraordinist Craig Karges!

Welcome to the 5th Annual

National Property Preservation

Conference

Day 2

Rising to the Challenge

Agenda - Day 2

Time Session

8:45 - 10:15 Community Impact

10:15 - 10:30 Break

10:30 - 12:00 Vacant Property Registration

12:00 - 1:30 Lunch

Conference Adjourns

Community Impact

Community Impact Moderator: Deb Oakley

National City Mortgage Senior VP Homeownership Preservation

Panelists: – Vicki Vidal, MBA Senior Director

– Sherilee Massier, Wells Fargo P&P Manager

– Doug Leeper, City of Chula Vista

– Joe Schilling, VA Tech Professor and Director of Research and Policy: National Vacant Properties Campaign

– Dave Gatton, US Conference of Mayors Director

– Dion Irish, City of Boston Assistant Commissioner

– John Cascardo, City of Dearborn

– Dan McLaughlin, MERS, Inc. EVP Product Division

– Robert Klein, Safeguard Properties CEO

Session Overview

As the country faces challenges brought on by

the increase in vacant properties, Industry and

Community leaders discuss initiatives in place

to address vacant blight

Neighborhood Stabilization Program

NSP Overview

Authorized under the Housing and Economic Recovery

Act of 2008

Provides emergency assistance to state/local governments to acquire and redevelop foreclosed properties that might

otherwise become sources of abandonment and blight within their communities

September 2008 announcement of $ 3.92 Million allocated

to cities eligible for direct funding

(pending approved application)

Permitted Use of Funds

Acquire land and property

Demolish or rehabilitate abandoned properties

Provide down payment and closing cost

assistance to low- to moderate-income

homebuyers

Key Requirements

Applications for funding must be submitted to HUD

by December 1, 2008

Following approval of the application, cities will

have:

• eighteen (18) months to obligate the funds

• four (4) years to spend the funds

US Conference of Mayors Survey Results –

Use of Federal Funds

61% said they would use the funds to acquire vacant/ abandoned properties

56% would clean up land or rehabilitate structures on properties

54% would demolish structures on properties

42% would maintain already acquired properties

29% would establish land banks

20% would establish financing mechanisms for purchase and redevelopment of

vacant and abandoned properties

Source: US Conference of Mayors 2008 Vacant and Properties Survey and Best Practices

Protecting our Communities

The Industry is committed to preserving properties and maintaining neighborhoods in the interests of our

communities and in support of local code enforcement officials

Servicer Benefit

Protects their mortgage collateral from damage or destruction

Preserves the mortgage holder’s and its investor’s financial and legal interests in the properties

Prevents potential code violations, avoiding costly citations or fines and the loss of goodwill

Community Benefit

Prevents decreases in neighborhood property values as a result of property deterioration

Ensures timely compliance with local code requirements

Protects neighborhoods from nuisances, vandals, and other dangers associated with vacant properties

Initiatives

Create Transparency

– Code Enforcement/Community Contacts (MBA Website)

Coordinate

– Work with local CDC’s and city officials to build productive relationships to benefit all affected parties

Educate

– Servicers to understand and appreciate the impact of vacant/blighted properties on community resources

– Code Enforcement to understand the guidelines servicers must follow in managing vacant/blighted properties

Break

10:15-10:30

Coming Up: Preserving and Protecting our Homes

Vacant Property Registration

Vacant Property Registration

• Municipalities throughout the country are enacting new ordinances, or enforcing existing ones, centered around the registration of vacant properties.

• Registration ordinances require owners of properties that have become vacant or abandoned for a certain length of time to register formally with the local government.

• As a response to the foreclosure crises, many cities struggling with new inventories of vacant homes are creating ordinances to help mitigate damage to communities and recover costs incurred.

• Disparate non uniform VPR ordinances have been challenging for the Industry to comply with

VPR Industry Challenges

• Distinguishing between pre-sale and post-sale registration

• Pre-sale ordinance requirements sometimes raise potential conflicts with other laws and regulations (i.e. requirement to remove personals, re keying of all access doors)

• Definition of Vacancy Status not uniform

• Local Contact requirements are challenging for those utilizing National Field Service vendors

• Penalty provisions in some ordinances were considered to be confusing and potentially costly

– Example: some require maintaining property in accordance with building codes

• De-registration of properties

• Securing requirements sometimes unrealistic (metal doors)

• Signage requirements invite vandals

MBA VPR Committee

• National Vacant Property Registration Committee, consisting of cross-industry participants, was formed to reach out to cities and offer industry help, support and expertise.

• The foundation behind the committee’s efforts has been to identify key provisions that raise concerns and develop consensus on a set of recommendations to address those concerns.

• Key initiatives currently undertaken by the committee: – Educate communities nationwide as to what is

encountered in the field

– Creation of a “Model Ordinance” combining best practices from around the country as a starting point for cities to consider as they enact their own legislation.

– MERS (Mortgage Electronic Registration System) initiative

MERS Solution to VPR

• Created by the mortgage banking industry to streamline

the mortgage process by using electronic commerce to

eliminate paper

• Acts as nominee in the county land records for the

lender and servicer

• The MERS system will include contact information for

the servicer and field service/property

preservation company

MERS Solution - VPR

• iRegistration provides servicers with a cost-effective additional option to utilize the MERS system strictly for this initiative

• Municipalities will receive access and training at no cost to utilize the system to identify the property preservation contact

• Contact information including name, title, phone number and email

• Pilot program to begin in Boston MA, Stockton CA, St. Paul MN, Saint Louis County MO, and Chula Vista CA

Thank You for Attending the

5th Annual

National Property Preservation

Conference

Please join us for lunch!