Executive Conversations is a HousingWire web series that profiles powerful people in the financial industry, highlighting the operations and the people that make this sector tick. In the latest installment, we sit down with Robert Klein, co-founder and chairman of SecureView, to discuss the company's bold goal of eliminating plywood boarding across the country — and with it, community blight.
Q: You founded Safeguard Properties in 1990 and grew it into the largest field services company in the industry. What was the impetus to then start SecureView?
A: Community blight is a cancer and if we don’t address the causes it will only get worse. I believe there are two contributing factors: the length of time for the foreclosure process, which can leave a property vacant for years in some cases, and boarding, which invites many forms of vandalism. The moment you put up plywood, you’ve already caused damage to not only that property but to the entire neighborhood as well. “Unlike a bottle of wine, a vacant property does not get better with age.”
When I saw the SecureView product I fell in love with it — I knew it was the answer we needed to help address community blight. I’ve always been against boarding with plywood, but we did it because we had no choice — it was the only thing out there.
Q: Your work in Cleveland’s Slavic Village neighborhood has pioneered a new model for servicers and communities to work together to address community blight. Fill us in on how that came about.
A: I wanted to do something to reduce the blight in a community near where I live. The home values in Slavic Village before the housing crisis averaged around $150,000. After the crisis, the average property was worth about $20,000.
Based on my experience I realized one of the biggest problems in our industry is the lack of communication with communities, we all have the same goal which is to maintain the properties and stop blight. I knew that in order to be successful I needed to come up with a different approach. What resulted was the idea of getting the community involved and to rehab an entire neighborhood and not just a few houses.
For this project Safeguard partnered with Cleveland real estate developer Forest City Enterprises and two local nonprofits to formSlavic Village Recovery. I insisted that this be a for-profit entity and that we run it like a business. We spent about two years meeting with all the partners and ironing out all the details. We surveyed 2,200 houses to find out which ones were vacant and which ones were occupied to get a clear picture of the neighborhood, and then we started tracking down the owners of the vacant properties.
The first thing we did was remove all the plywood boards and secure those properties with SecureView. When the community saw that we were removing plywood, they knew we were serious about this effort and we got the entire community to work with us. It changed their whole mentality because it immediately made their neighborhood safer and they could see the potential.
Q: What kind of results have you seen there?
A: It has been an absolute success and we are now getting calls from other hard-hit communities all over the country. We have rehabbed and sold 58 homes in Slavic Village in the last year, and have plans to do another 200.
We have worked hand-in-hand with the community and we’ve been able to rehab these homes for about $45,000. Our mission is to restore the quality of the home and that includes new roof, new siding, new boiler, etc. Now the houses are selling for about $60,000, which means people in that neighborhood are getting 30-year mortgages for about $495 a month. Rent had averaged $800 a month in that area, so we also created affordable housing there. It’s a win-win-win.
Q: The number of distressed properties is dropping to more normalized levels in much of the country, but some cities and neighborhoods are still fighting the effects of the foreclosure crisis. What are you seeing as you work in those areas?
A: You might not see as many foreclosures, however the inventory of vacant properties is still high in many communities and those properties continue to drag down the entire communities they are in. For example, the neighborhood right next to Slavic Village called Maple Heights was a pretty decent place to live. Then all of a sudden one property forecloses and it’s like a virus that spreads and has no borders. The industry is focused on the medium and high-level homes — how do we keep people in homes, with modifications or short sales. That’s great, but if you don’t address neighborhoods with low-asset values, they will drag other neighborhoods down with them. A vacant property can start out halfway decent, but two years down the road if it’s been boarded, it’s going to get vandalized and bring in more crime to a neighborhood. There’s no doubt about it.
The industry (HUD, Fannie Mae and Freddie Mac) needs to change their policies which includes securing properties with clear boarding earlier in the process as well as updating their reimbursement policies to allow services to be reimbursed.
If you put up clear boarding in the presale stage of the foreclosure process, you could save millions of dollars in damages to those properties and you also save other homes in that neighborhood from being devalued. We continue to work to pass local ordinances to ban plywood boarding for this very reason.
Q: What does the future hold for SecureView?
A: My goal is to eliminate the use of plywood boarded property in the United States. There is no reason to use plywood now that there is a better product available. That’s a large goal, some would say an unrealistic goal, but I started Safeguard in the same way. I remember sitting at a conference when Safeguard was making 50,000 inspections a month, and someone told me my goals were too big: at one point Safeguard was doing over 1 million inspections a month. I think that the SecureView goal to eliminate plywood boarding in the nation is big but very doable.
No one wants to live in a blighted community, and now we can do something to prevent it.