Steve Jobs, the visionary leader of Apple computer who died last October probably never gave much thought to the REO business. Use of his creations, however, have become pervasive worldwide in the business and entertainment industries. iPhones, iPads and Mac computers are everywhere. While most major banks and mortgage lenders and servicers utilize PC-based computer and IT systems, millions of prospective REO buyers access databases of available properties through Apple devices.
What would Steve Jobs have done to address the housing crisis and REO situation if given the authority to create a solution? How could his vision and genius help solve the problem? Of course we'll never know. It's unlikely Jobs would have had any interest in delving into such an issue. His goals and aspirations were more global ... far beyond any single aspect of the U.S. or world economy. Or were they?
What new technologies exist for what remains essentially a 'bricks and mortar' problem, i.e., foreclosed homes held in lenders' REO inventories? Hundreds of computer-based programs exist and are being used by lenders and servicers to track, manage and sell their REOs. Outsource vendors have proliferated, and the in-house aspects of loan servicing, loss mitigation, short sales and REO management are all computer driven. Even phone calls from borrowers are processed with sophisticated, complex and often confusing 'voice menu prompts' and predictive dialing and routing technologies.
The mammoth task of connecting prospective buyers with physical real estate assets still relies on some very basic procedures: Buyers must see the actual property, listing agents must show those properties, and human asset managers must make decisions on pricing, remediation and purchase offers. Could a Steve Jobs or Bill Gates have developed an 'all-knowing' algorithm that would essentially replace humans in REO asset management positions? Auto manufacturers worldwide employ high-tech robotics in nearly all aspects of motor vehicle assembly. Sophisticated robots like Intuitive Surgical's revolutionary 'Da Vinci' system perform complex surgical procedures that rival those of even highly-skilled doctors. NASA sends unmanned vehicles to Mars to collect surface samples and transmit high-resolution photographic images millions of miles back to earth. Even Wall Street employs computer-based trading platforms that buy and sell securities based on complex investment models, executing millions of trades each day, often at the peril of individual investors. Why then can't the relatively simple process of REO management and disposition be automated too? Asset managers and local listing agents already use a wide variety of computer programs and tech tools that aid in this process. Available properties can be browsed online by prospective purchasers and even the old-fashioned 'deposit receipt' can be generated, completed and transmitted via the internet. But what's the next step in the evolution of computer and internet technology as it applies to REO sales? Could a super computer ever supplant the human element in management, marketing and sales operations?
The actual process of buying and selling, maintaining and renovating homes and condominiums is still decidedly low-tech. There is no substitute for a buyer seeing a property in person. Listing agents still have to drive to properties to show them, and humans must still mow lawns, board up windows and paint and repair walls. These functions are both labor intensive and time consuming.
What leading-edge, technology-based tools have been developed for use in the REO industry? And what new innovations are in the works as mortgage lenders and servicers seek to streamline and optimize their asset management operations and reduce operating costs?
REO Sentinel offers a monitor which can be installed in vacant, lender-owned properties and report conditions and provide images of interiors. This device can alert asset managers of break-ins or other changes in the condition of a property. A device like this would no doubt be an attractive target for vandals, who routinely strip plumbing and electrical fixtures, appliances and even copper wiring from vacant homes. A home-monitoring device such as this could provide the same benefits to an owner-occupied property as it would a vacant REO.
Another recent advance in REO management and marketing is the use of property videos. Run a black and white photo of a cute Polar bear cub in a major newspaper and it's lost amid ads for Lasik eye surgery and used cars for sale. Shoot a color video of that same cute, cuddly cub and post it on YouTube, however, and it's an instant internet sensation ... rating a feature segment on NBC's 'Today' show. Yes, videos have captured the hearts and minds of the world. REO property videos have dual benefits; assisting desk-bound asset-managers by providing 'virtual tours' of the properties they manage, and helping local listing agents in advertising and marketing homes to prospective buyers with similar 'virtual tours.' Citimortgage has already begun to experiment with video, allowing local brokers to add video content as a supplement to written status reports and digital photo images. Several 'high-end' real estate brokerage companies showcase their luxury home listings through the use of video tours. These often elaborate video productions make use of nuanced lighting, wide-angle camera shots, and soothing background music. Most of these so-called video tours, however, consist only of 'slide shows,' ... a series of nicely composed still shots, edited for maximum visual impact. One California-based brokerage allows prospective homebuyers to access still photos and video content on a smartphone as they drive past listed homes. The user can enter a code displayed on the for-sale sign outside and view details 'on demand.' As the number of functions and 'apps' for smartphone technology increases, expect to see more pervasive use of video both by asset managers and local listing brokers. Asset managers can use the more comprehensive data that videos provide to optimize initial list pricing and to monitor property conditions during the repair and renovation processes, while local real estate agents can utilize videos of properties ready for sale to allow prospective buyers to conduct 'virtual tours' of available listings from the comfort and convenience of their homes or offices.