DS News

26 CHANGING THE GAME Fannie Mae Calls Plywood 'Unacceptable' for Pre-Foreclosure Properties e problems that inherently result from using plywood to board up a vacant residential property have been well documented over the years. Vandalism, violent crime, the spread of community blight, and lowering of property values are just a few of the issues that for years have been associated with the status quo. For many years, Robert Klein, Founder and Chairman of Safeguard Properties and Founder and CEO of Community Blight Solutions, used plywood to secure properties because for the longest time it was the only method available. But the problems with using plywood were obvious—"Plywood shouts out loud that the property is vacant," Klein said But advocates have long been calling for the industry to adopt polycarbonate as the industry standard for securing vacant properties and the progress that the material has made over the last few years when it comes to replacing plywood as the go-to method has been steadily picking up steam. Now, that progress appears to have kicked into overdrive. "e use of clear boarding gives off the appearance of a normal window, so the curb appeal is much higher on a clear boarded property versus ply wood boarded," Jake Williamson, VP, REAM Fulfillment & Operational Analysis at Fannie Mae told DS News in May. "e first thing is the curb appeal. [Polycarbonate] does give off the perspective that it's just a normal home in a market where you're trying to compete with non-distressed sales, that it's just a normal home. e second thing is, it's an incredibly secure product. You can literally throw a cinder block at it and it's not going to shatter or crack." In November, Williamson announced at the National Property Preservation Conference (NPPC) in Baltimore, Maryland, a new allowable from Fannie Mae that promotes the use of clear boarding on pre-foreclosure properties. Fannie Mae has been using polycarbonate clear boarding to secure vacant homes since early 2014 and as of this summer, it had been installed in about 4,000 Fannie Mae properties. Fannie Mae started using clear boarding in four states originally (Illinois, Florida, Ohio, and Michigan). e new allowable announced by Fannie Mae at the NPPC finds the use of plywood unacceptable when securing vacant properties. Now all vacant properties owned by Fannie Mae will be required to be secured by an alternative to plywood, whether in pre- or post-foreclosure state, or REO starting on November 9. ere will be a 90-day adoption period for servicers and vendors to apply the new rule going forward, according to Fannie Mae. Five Star Institute president and CEO Ed Delgado was at the conference moderating a panel on the state of the housing industry and commented upon hearing the news. "is is a major step forward for the cause of curbing urban blight across communities," said Delgado. "e application of plywood to a property is a tell-tale sign that the home is vacant and advertises it as a potential haven for criminal activity. Removing plywood from the equation while advancing clear boarding is a game changer." Despite the higher upfront cost, the rationale is that servicers will actually save on costs in the long term because of the product's ability maintain the value of the property and shorten the disposition process. "Eighty percent of the issues that the industry has with the conveyance timeline are resolved when the industry moves toward clear boarding," said Klein, "is move will have a tremendous impact on ensuring that properties return to the market in a more stable and marketable condition." Brandon Johnson, CEO of property preservation company GTJ Consulting in Detroit, told DS News in May 2016: "We try to explain that the benefits, in our mind, far outweigh the additional cost, because it's a long-term solution. You can't get in, you can't break through it, and it withstands the elements. It doesn't disintegrate over time, and it looks much better, because when you drive by, you can't even tell that the property is boarded up. On a number of levels, we feel it's a great product, and a definite step forward in the urban fight against blight for communities." So now the question becomes, "when will the rest of the industry follow Fannie Mae's lead." "Eighty percent of the issues that the industry has with the conveyance timeline are resolved when the industry moves toward clear boarding." —Robert Klein, Founder and Chairman of Safeguard Properties

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