Despite numerous news reports indicating a decline in foreclosure inventory over the past several months, RealtyTrac recently pointed out that foreclosure starts are up on a monthly basis in 26 states, including Maryland, Florida, Oregon, Connecticut, New York and New Jersey. This would seem to signal that the purported housing recovery could be more artificial than many industry observers and “experts” would have us believe.
Foreclosures clogged up in the pipeline due to robo-signing and other factors are finally being pushed through the system and are creating another wave of activity. This is no tsunami, of course, as monthly foreclosure starts are 64% below the average peak of 2010, but the fact remains that it is still 54% ahead of historical averages, as reported recently in Mortgage Servicing News.
RealtyTrac also recently released its midyear 2013 U.S. Foreclosure Market Report that shows that just over 800,000 U.S. properties had foreclosure filings, scheduled auctions, notices of default or became REOs during the first half of this year.
While this represents a 19% decrease over the previous six months, it is still a significant number of properties. Foreclosures may not be as big a problem nationally as it has been in recent years, but in certain specific markets the numbers remain noteworthy.
If the Fed relaxes its economic “stimulus” activities, as it has indicated it soon will, and interest rates begin to rise noticeably, as Wall Street seems to fear (based on the significant drop in the stock market during the week ending on Aug. 17), a reduction in the free flow of money emanating from the Fed could also affect the recovery.
Among other things, what this means in part is that there remains a great demand within the mortgage default servicing industry for property preservation/field services across the nation.
Regular property inspections to determine occupancy status, property condition, neighborhood trends and other factors provide vital information for lenders, servicers and investors to protect their assets while in many cases helping with community revitalization efforts. Vacant property registration services and building relationships with code enforcement officers enhance these efforts.
In addition, today’s advanced mobile technologies are improving real-time reporting and tracking by field services providers to their clients. More accurate discovery of damages and bidding on needed repairs, on-site QC inspections and advanced internal quality control inspections, score-carding, and other process improvements help field services providers to better serve their clients.
Of course, beyond the typical deferred maintenance and poor condition often found on properties in default—especially if they are vacant—wildfires, earthquakes, floods, tornadoes, and even severe drought negatively impact properties in large numbers across the country. At Assurant Property Advantage our nationwide in-field insurance adjusters gain access to disaster areas faster than many field services company representatives can—in many cases faster than the homeowners themselves.
Access to the impacted areas and the properties therein, of course, is vitally important for field services providers in assessing the extent of any damage, securing bids, communicating with their lender/servicer clients, beginning the process of filing claims, then initiating and completing necessary repairs. It is critical for property preservation companies to have such “boots on the ground.”
In fact, advances in geo-coding technologies are making it easier for best-in-class field services providers and their clients to better establish what collateral may be affected.
Defaulted loans, however, continue to generate the largest number of work orders for field services providers. Depending on whose predictions you choose to believe, the outlook for the remainder of 2013 and early 2014 would seem to portend the potential for continued slow growth and possibly another rise in foreclosures in many parts of the country—this would be particularly true if we were to enter into another recession, which, of course, very few economists are predicting.
Continued unemployment rates above 7%, low consumer confidence, higher taxes/fees for many Americans (including those connected with the Affordable Healthcare Act), the aforementioned slow economic recovery, inevitable disasters and so forth could all conspire to keep property preservation/field service providers quite busy in the foreseeable future.
Lynn Effinger is business development manager for Assurant Property Advantage, part of Assurant Inc.