Yes, I’m talking to you. I’m talking to everyone who services mortgage loans, really, and I’m asking an important question: are you enabling fraud in your company?
According to the Merriam Webster Student Dictionary, definition of enable: to make able; to make possible, practical or easy; to give legal power or permission to.
I’m not being overly dramatic. It’s a serious question.
If your Loss Mitigation and REO Departments interact with listing agents in the traditional fashion, then you are enabling fraud. Point-of-sale fraud is being perpetrated every day by listing agents that misrepresent your property, delay offers from being submitted to you, detour other agents from submitting offers and worst of all, don’t submit every offer.
Significant amounts of money and effort have been spent in the post Sarbanes-Oxley world to ensure that proper controls and protocols are established, yet listing agent actions seem to be outside the reach of compliance efforts. All the data you use and all the quality control measures you create can’t solve this problem.
So what, exactly, is the problem? The “gatekeeper” listing agent who only lets you know what he or she wants you to know about listing activity and market feedback.
The solution is simple and it doesn’t require therapy: Bring the two most motivated parties together—buyer and seller.
Legacy servicing systems and more recent loss mitigation and REO management systems were never designed to facilitate the sale of property. They were designed to “manage” loans or assets in inventory.
Today’s workflow processes stop with the listing agent, who is not only outside of the corporate umbrella but who is also not trained in the same loss mitigation techniques as your bank’s employees. This individual who holds the keys to your sales functions as an independent contractor, working from the comfort of his home, marketing assets worth millions.
When you look at it that way, don’t you just gape with astonishment? How does governance permit independent contractors to represent the bank with hardly any effective oversight?
Can you imagine a Wall Street trader kicking it around in his sweats, untrained and unsupervised, offering stocks, bonds and other investments with almost no oversight?
Why is the sale of real estate any less important?
The truth is, the person who’s been engaged to market and sell your assets often has his own agenda. And that agenda is almost never in line with the bank’s.
When you step back to view the situation from afar, it seems so clear: Prevailing systems and business processes were designed and built to specifically exclude the most motivated party in the sale of distressed real estate: the buyer and their agent.
As it stands, there is no role for them in today’s process of selling distressed assets. They have no seat at the table. And that fact alone enables fraud.
It’s like giving an alcoholic the bottle. Or giving pills to a drug addict. You’re a party to their destruction.
Or maybe it’s the other way around.