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things? We learn a lot. Most important, we learn how we can do a better job of protecting and preserving the millions of properties mortgage servicing clients entrust to the care of property preservation companies. By analyzing the data, we can see deficiencies or quality issues that require corrective measures to improve quality. In one year, for example, Safeguard experienced a 39 percent improvement in REO properties with no deficiencies or quality issues and a 76 percent improvement in the timeliness and quality of grass cuts by analyzing our own performance data and taking corrective action. Ultimately, our goal is to utilize the data to predict trends and patterns. By analyzing the performance history of contractors along with property condition reports, for example, we can start determining the likelihood of on-time and proper work order completions by contractor and by geographic region. Such insight can be used to build vendor network capacity where market needs are highest. Not only is data important to improve operational performance, but it also allows field service providers to be better "eyes and ears" for their clients. By analyzing data, we can predict which properties in which regions will be more prone to damages or vandalism. As a result, we can make recommendations to clients so they can better protect assets that may be at higher risk. Additionally, by providing mortgage servicers with reports that give them a clearer picture of what is happening in the field, property preservation partners can empower their servicing clients to make better business decisions about their own internal requirements and procedures to protect the integrity of their properties and their financial interests. The data can also be used to help identify ways to reduce code violations, fines, and fees, and with the insight gained, both servicers and field service providers can improve community relationships. By analyzing and acting on information, field service companies become true partners in the field, helping their mortgage servicing clients become more proactive rather than reactive to address property issues. At the same time, using information as a tool to identify, predict, and act on trends, we can help to improve quality and evolve best practices across the industry. At Safeguard Properties, George Mehok is responsible for all information technology-related resources and assets. He plays an active role in identifying strategies, plans, and opportunities to apply technology that supports the company's growth, maximizes efficiency, and improves quality control. 54 P R O P E R T Y P R E S E R V A T I O N DALE MCPHERSON CEO Field Asset Services KAREN GLASGOW EVP Field Asset Services PAUL CARLSON At Assurant, he is responsible for supporting EVP and expanding client relationships. Field Asset Services Most industries and employers were impacted by the housing crisis and the recession and have re-evaluated and reprioritized how they do business. Servicing is no exception. Though the economy is showing signs of improvement, there's still a fair amount of uncertainty about what the future holds for mortgage servicing. We do know one thing for certain—2013 will bring more changes. It is expected that regulations will continue to direct the who, what, when, and where of servicing. Field Asset Services' (FAS) executive team weighed in on the future of servicing. Collectively, Dale McPherson, CEO; Karen Glasgow, EVP; and Paul Carlson, EVP, have more than half a century of default servicing expertise. "Everyone hoped the housing crisis would end and things would return to normal, but what we have is a new norm," McPherson said. "Risk mitigation will be the key to servicers' success in the next few years. As the regulations were levied, the risk for servicers began to shift." McPherson acknowledges that risk mitigation has always been an important factor, but he says it will be the single biggest difference between success and failure for servicers over the next few years. "Priorities are shifting and mitigating the risk associated with extended lifecycles of the assets within portfolios will increasingly be top-ofmind for servicers," according to McPherson. Who | The companies servicers engage to mitigate these risks are changing; the "who" could look very different by the end of next year. Property Preservation= Preserving Neighborhood Values Two schools of thought are prevalent within the industry. One is compression, which involves reducing the number of vendors in a servicer's network in order to leverage volume and minimize fees. The second is expanded networks, which provides a broader base and keeps vendors jockeying for position. What | There are several risk factors impacting the industry and property preservation in particular. Glasgow describes how municipal code enforcement and homeowner associations (HOA) are influencing the direction the industry is taking. "I have seen first-hand how the overwhelming burden of fees, fines, and penalties have shocked the industry," Glasgow said. "Aggressive code enforcement came on strong and hit the servicers hard in the past couple of years. As expectations are set and understood, servicers, with their field service partners, have been able to implement processes that significantly reduce risk and bring additional benefits to neighborhoods." Glasgow continued, "In the end, everyone has similar goals; how they get there has been the differentiating factor in recent years. The processes have improved through technology and communication. With the right partner, servicers will see further reductions in the cost of risks." HOAs have a similar shock-factor, Glasgow says. "If servicers don't act quickly, HOA fees grow exponentially. Additionally, in 19 states, servicers run the risk of losing the asset to the HOA. Diligence and speed in mitigating these risks are imperative to servicers managing their risk," Glasgow explained. When and Where | "Timing is everything, right?" according to Carlson. "The elongated lifecycle of assets increases servicers' exposure. HOA, code enforcement, and last but not least, collateral deterioration causing extensive loss in value are the three areas of significant risk to servicers." Carlson continued, "The latter of the risks commands a greater need for property-level assessments and mitigation. We see the servicers requiring more detailed property inspections and preservation to maintain values during the extended timelines." "We are optimistic here at FAS, that the learning curve is over and now it's time to implement what we know," McPherson said. "Moving forward, we will see servicers tightening-up and focusing on risk mitigation." Dale McPherson started his career in loss mitigation more than 37 years ago and has led FAS for the past 13 years. Karen Glasgow has been with FAS since 2010 and is responsible for client support services. Paul Carlson joined FAS

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