Chad Mosley is COO of MCS Solutions, a nationwide provider of property preservation, inspections, REO property maintenance, valuation services, title and closing services and other mortgage-related services to the financial services industry. Mosley has more than 15 years in the industry, managing all sides of the mortgage process from originations to the disposition of REO properties. He joined MCS in 2008 as an assistant vice president of business development and was later named vice president of operations, before moving back to business development in 2011 and promoted to chief operating officer in 2016. Mosley recently spoke with DS News about challenges companies face when properties sit vacant for lengthy periods.
Nearly a month into 2017, what is the biggest issue or issues that you're facing as far as property preservation, or maintenance of vacant properties?
One of the biggest issues that the industry is facing, especially as it relates to vacant properties, is the amount of time that a lot of those properties are sitting in the foreclosure process. Different states have different time frames, but we’ve seen those timelines in some states and some certain geographies in the country, get really extended over the past few years. I’ve seen some states that are a thousand-plus days on average to complete a foreclosure, which is multiple years in terms of average time frames.
When those properties that are in that process sit vacant for that long, that results in several things. Number one, just additional deterioration. When a property is sitting vacant, and it is not being kept up by an occupant or by a homeowner, you’re going to have deterioration. You’re going to have issues that come up. Although companies like MCS and some of our other peers in the industry support the mortgage servicers and perform work on those properties—we're doing monthly inspections, we're doing grass cuts, we're going by the property, we’re doing services to that property—it's still not going to be the same as an owner of a property that’s living in that property that’s keeping the house up every single day.
Deterioration contributes to community blight. You have the risk of vandalism and of theft going on at properties when properties are vacant. People can get inside, and then you have squatters and other illegal activity going on. There’s a whole laundry list of bad things that can happen when a property is sits vacant for month after month, and in some cases year after year.
If a property has been vacant two years or more and it's deteriorating, and all those things you talked about are happening, what can you do if you're a property preservation company?
A few points on that: we are seeing a trend with a lot of our clients, and really an industry trend, where a lot of servicers are taking what I would call a more market-ready type of approach in regard to vacant properties that are in the foreclosure process. What I mean by that: in some cases they're cutting the grass more frequently than what’s required by normal investor guidelines. They are doing the work at properties, and making repair decisions on properties trying to match the neighborhood standards.
A lot of times in the past, going back seven to 10 years ago, if a property was vacant and the windows were broken, you would put some plywood on it, and really a whole lot wasn’t done to maintain that property. As a result, those properties would stick out like a sore thumb. Everybody in the community knew those properties were vacant. In my mind that put a big red X on the property if everybody knew it was vacant, so that attracted criminal activities, and squatters, and problems like that.
What you’re seeing now with this philosophy of getting properties more of market-ready and neighborhood-like is that those vacant properties aren’t sticking out like they used to. The grass is being maintained just as well as the neighbor’s grass. You might have somebody living there in the property, and so I think by taking a lot of those steps, you’re seeing that help cut down on the deterioration, help eliminate neighborhood blight, and help keep those properties in as good a condition as possible as they go through the foreclosure process.
One other thing that we're seeing with a lot of our clients is that actually more work is being done at the properties before the foreclosure sale. These are properties that are vacant and abandoned, yet in the past most servicers would wait until the actual foreclosure sale happened, and then would hurry up and do a bunch of work on the properties. Then they would try to get those properties conveyed back to the investor whether it be HUD, Fannie Mae, Freddie Mac, or it would turn into an REO. What we're seeing now is with more work being done pre-foreclosure some of those properties. We're starting to see work done further upstream, so to speak, so that way when the properties actually do go to foreclosure sale you've got properties that are in better condition, and they can either get sold as an REO or can get conveyed back to the investor quicker—thus spending less time in that post-foreclosure process.
Also, from a security standpoint, we're seeing the use of steel security more and more in the industry. These are in specific areas of the country that are traditionally high crime and high-risk areas where it would be very hard to keep criminals out of the property just with a normal window pane or even with plywood. There’s a couple of different companies in the industry that provide steel windows and steel doors, so that way if you do have a property that’s broken into multiple times and you just can’t keep the criminals out, we’ll actually put steel on the property. That helps with the overall security of the property, keeping criminals, squatters, and thieves out of the property during the foreclosure process.