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 Milt Shaw, senior vice president of strategic relationship management at PEMCO Limited, to talk about the increased regulation of vendor management, and how to thrive under it all.
Q: New regulation has put vendor management under the microscope. What perspective do you have from PEMCO Limited’s 30 years of experience with property preservation and management?
A: Our experience with property preservation started back in the early 90’s in Hawaii. Our properties were spread out across the Hawaiian Islands and so we recognized the key components of vendor management very early. These components include: vetting the vendors prior to onboarding, successful completion of vendor training, vendor performance monitoring, scoring and tracking. PEMCO Limited has developed an operating system, putting emphasis on oversight compliance with our staff and vendors to assist with reducing or mitigating unwarranted risk for our clients.
Our teams of internal and external experts share the common goal of ensuring our client’s needs and expectations are successful met, which has led to PEMCO Limited’s excellent reputation in the industry and strong client partnerships.
Q: What are some of the challenges you have faced in providing appraisal products and management services this year?
A: PEMCO Limited has over 18 years experience in valuation management. As a result of our positive experience, results, and client satisfaction, we decided to formalize our work and open our own appraisal management division in California. One of the greatest challenges was the significant competition. Once we were able to meet face to face with prospective clients, we learned that there was an opportunity to improve the quality of work through our strong relationships with our knowledgeable, experienced, and skilled appraisers. Additionally, PEMCO Limited’s reputation as a professional and responsive partner has opened doors of opportunity. We are building on several strong relationships in California, where our business is focused.
As an AMC, compliance with regulations is a critical component to success. We maintain strong relationships and continuously outperform our competitors. Regulations differ from state to state so we decided to grow slowly and concentrate in building a strong client foundation in California prior to evaluating opportunities in other states.
An important decision in supporting our opportunity and ability to succeed as an AMC was having the right valuation software. This decision was a challenge as there are so many systems available. The key is to identify a system that works well for PEMCO Limited that fits the needs of clients and has the ability to integrate with each client’s Loan Origination System.
Q: The CFPB has put a renewed emphasis on educating potential borrowers about the home-buying process. How does PEMCO Limited help its clients get a more informed consumer to the closing table?
A: PEMCO Limited, as one of the largest contract holders for HUD, has always been involved in training for the marketplace — for both listing and selling agents and for prospective purchasers. In addition, PEMCO Realty also understands the importance of training to ensure they have an informed consumer as they represent institutional and nonprofit clients.
Starting on the realty side, as Realtors, it is critical we understand the CFPB and how it affects the business we do. We make certain that when our buyers are getting a mortgage loan we offer choices, and when we do, we want to know that the lenders we recommend/refer are lenders that are in compliance with CFPB rules and regulations and share the protections they employ. One of the biggest issues is that lenders are ensuring that all buyers are receiving a written GFE (Good Faith Estimate) at the time they complete their loan applications. One of the ways that purchasers are protected is the final settlement statements at closing (specifically the buyer's closing costs) must fall within a certain percentage of the GFE that was provided at loan application.
PEMCO Realty vets the lenders we recommend and makes it a point to confirm with the buyer(s) that they received the GFE from the lender. When purchasers choose a lender on their own, we have a conversation with the lender to construct the offer with the appropriate financing information called for in the contract.
The CFPB recently announced new regulations that will impact closing times and disbursement of funds. In addition to new forms for residential mortgage transactions, the new regulations also require delivery timetables for delivery to consumers, impacting when closing can take place and disbursements are made. PEMCO Realty will be conducting ongoing training in regard to this and future policy changes with our agents and clients.
PEMCO Limited has formal training programs for listing agents and for listing agents to use with prospective sales agents and prospective buyers. Some of our listing brokers use the buyer outreach portion of our marketing/outreach requirement as a homebuyer education platform. Our listing brokers will also partner with housing counseling agencies and other local non-profit organization like the Urban League and local housing agencies. During these training sessions, the buyer is educated on how to purchase a HUD home with the participation of housing counselors, lender, title company, appraiser, and inspector.
Q: Leadership is one of PEMCO Limited’s core values. What does that mean within the organization?
A: Leadership has always been one of PEMCO Limited’s core values; however, having effective leadership today is more important than ever in today’s changing industry. Our leadership understands the vision of PEMCO Limited and is able to effectively communicate with all levels of the organization to ensure goals are being met and are working in conjunction with PEMCO Limited’s vision. This communication leads to an informed staff that understands our direction, our objectives, their role and how to execute to achieve our desired results for the client.
With the expanding competitive environment and compliance regulations, we understand that we must have a very mature and collaborative approach in all aspects of our business.
Our skilled leadership team is responsible for formulating and executing strategies that keep PEMCO Limited highly competitive and successful within the market place.
Q: What does 2015 look like for PEMCO?
A: PEMCO Limited is very optimistic about 2015. We continue to work on our HUD contracts and are optimistic that we will retain existing business and earn additional business in the current round of contract proposals. That outlook comes from having a number of initiatives in place.
First is the continued growth and development of our AMC.
Second, in April of 2014 PEMCO Limited acquired a 49% ownership interest in a fund, Neighborhood Stabilization Capital Management (NSCM), and is working with an associated nonprofit, Home Preservation Exchange (HPE). NSCM is purchasing nonperforming loans with the objective of assisting owners in default to be able to retain their homes through modifications or be able to assist them in the disposition of their properties through a short sale or deed in lieu. HPE is working to raise capital for the fund and works with banks and servicers to assist them with the CRS requirements.
We are also expanding our focus in both the private and nonprofit market sectors and we’re very pleased with interest expressed in opportunities to partner in these markets.
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