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MortgagePoint » Your Trusted Source for Mortgage Banking and Servicing News 34 December 2024 F E A T U R E S T O R Y Q: How have market con- ditions, such as shifts in interest rates or the overall economy, impacted the property preservation landscape this year? What changes do you anticipate in 2025? This year continues to be impacted by a shortage of housing supply, which is driving the success of the Claims Without Conveyance of Title (CWCOT) and Second Chance auction sales. Many markets are still appreciating, creating ideal investment opportunities for investors via auction. While this is good for the overall economy in terms of real estate investments, it has negatively impacted the property preservation business with continual reductions in volume. What doesn't sell at auction is often in such a state of disrepair that getting the property into HUD's "Conveyance Condition" is challenging. Many of these assets have reached the end of their economic life. This causes increased financial risk for the preser- vation industry, as if we miss a timeline, or a material item, HUD considers it Mortgagee Neglect and, in order to convey, preservation vendors often have to do repairs and improvements at our own expense. One miss can easily cost us tens of thousands of dollars. Looking into 2025, we are cautiously optimistic that HUD will start following Fannie Mae's property preservation pricing. The GSEs review and adjust regularly, which would put the industry in a better financial footing, helping to secure the long-term survivability of our essential industry that helps stabilize communities and reduce blight, one house at a time. Q: What primary new tech- nologies or innovations are property preservation companies adopting to improve efficiency and service quality? How is AI impact- ing the sector? The industry continues to evolve and challenge the status quo by looking to reduce costs and gain efficiency in every step of the process. Some of the tools we are currently leveraging include predictive analysis for storm tracking to be proactive in securing assets prior to a major event. We are then able to quickly prioritize disaster inspections based on asset level risk reporting and deploy our Disaster Response Teams. Proactively managing these events allows us to book rooms and secure car rentals before the demand increases and availability ceas- es. This solution also allows us to push snow removal orders in the field, with the factual snowfall amounts, while looking at temperature highs in the next 24 hours. This significantly reduces trip fees when a vendor is dispatched only to find that the snow has melted. Artificial Intelligence has become "front and center" in successful property preservation company's playbooks. ZVN leverages technology that first gained rec- ognition in the insurance space. We are able to take large repair and renovation scopes that used to take hours, down to minutes. The photo-recognizable tech- nology is trained for our various clients to recognize deficiencies that our clients would want corrected and then provides a punch list of items that need to be bid. Our next phase is teaching AI to define scope and create the bids based on indus- try-recognized cost estimators. AI is more precise than a human in ensuring we do not miss anything. This also works for property condition reports and varying "conveyance condition" punch lists. Q: What are the keys to navigating local, state, and federal regulations impacting the property preservation industry? This continues to be a moving target. Staying abreast and having good matrixes and legal database reference providers is the only way to stay ahead of the curve and reduce your legal risk. There are numerous options available, but all come at a significant cost. The best solutions let you know about proposed laws before they are enacted, so you can proactively update standard operating procedures and get the updates out to the field, which is our first line of defense. We also listen to our local partners, who often know their own jurisdictional requirements better than we do. Swimming pool securing is a good example. It varies from municipality to municipality. Q: What are the key compli- ance issues that property preservation companies need to focus on? One of the highest risks is ensuring we don't treat our vendor partners like employees. Having good processes and procedures internally, with a team who understands this risk, and constant internal training, is essential to mini- mizing this risk. There are still ongoing class action lawsuits within our industry on this topic. Code violation management is another area that requires the utmost of "One of the highest risks is ensuring we don't treat our vendor partners like employees." —Denia Ray, VP Property Preservation, ZVN Properties Inc.