REO Managers Take Advantage of New Technology
It starts in a neighborhood when lights everyone is used to seeing on at night suddenly are off, and the neighbors start missing familiar voices and vehicles on the block. Another house goes dark, then another on the next street over, and then another one at the end of the cul de sac.
Properties vacant as a result of foreclosure are becoming more common on residential streets around the country, but the problems for both neighbors and lenders are just beginning.
It's fast turning into a jungle out there, with all sorts of predators looking for opportunities in America's vacant houses.
The first expectation for anyone responsible for vacant real estate is that homeless people will seize the opportunity to have a warm place to sleep. They call themselves "bandos" and are naturally drawn to abandoned houses.
"Many homeless people see the foreclosure crisis as an opportunity to find free, low-cost housing with some privacy," according to Brian Davis, director of the
Northeast Ohio Coalition for the Homeless. The power is often still on, he added, which keeps the intruders from having to light candles or even fires to keep warm.
But for REO managers, the homeless are far from the biggest problem. Often the homeless are too intimidated to stay in foreclosed properties due to the risks posed by drug dealers, prostitutes, gangs, the police and even copper thieves who will strip all available pipes and fittings for the easily marketable metal.
REO managers know the best way to keep from having REO problems is to keep from having REO in the first place.
There is actually a technology these days that can help in that regard, just as there is a technology that can help keep unwanted intruders out of properties that unavoidably go into the REO portfolio.
The first technology is a simple idea that accomplishes a difficult task - it helps short sales happen by drastically reducing the time and communication difficulties that have historically made short sales difficult to put together. It is a Web-based platform that essentially coordinates the workflow from all parties who are relevant to a short sale.
The second is a combination of hardware and software, a "black box" that is installed in the vacant house, and which is completely wireless and independent. The device monitors all the activity in the property, reporting frequently and on demand via a Web-based dashboard that is viewable at any time by the lender, servicer or property manager.
First, let's talk about short sales. Everyone recognizes the value of the short sale these days. The concept is easy - find a buyer for a seriously delinquent property and save both borrower and lender the pain of foreclosure by accepting less than you are owed to sell the home.
But it's not easy, as experience has shown us.
First, after finding a buyer, it is important to quickly contact the lender for their short-sale requirements, than get someone to respond with their list, go about trying to fulfill the requirements, then resubmit the information.
Often times by the time you get an answer back - the buyer is long gone, the home is already in foreclosure and the REO department is gearing up for a new addition to the portfolio.
It doesn't have to be that way if somebody or something can coordinate the workflow around the short-sale process.
Web-based workflow platforms designed specifically for short sales are a great way to maximize the potential of this important tool.
"We think this product is very interesting," says Richard Rice, vice president of default operations at EMC Mortgage. "We're excited to be one of the first to use it as a test partner. It puts the borrower, lender and Realtor data in one place, in an electronic format that will really speed up the short sale process."
Sites like National Quick Sale offer remarkable results, taking the cycle time of a short sale from eight to twelve weeks to eight to twelve days or less.
Once you have taken a property back, however, you need eyes and ears onsite - and more.
The remote device for monitoring REO is a new concept, one just starting to come online with offerings like REO Sentinel.
Wireless technology has been with us for quite some time, and its application to property preservation and security is a natural progression in the state of the art.
These devices are able to constantly monitor moisture levels to detect things like damaging water leaks and broken windows, gas leaks, which can happen with faulty seals and vandalism, and power outages, which are critical in areas that need sump pumps running full time.
Even more importantly for many areas, the devices include motion-activated cameras that will detect intruders as well as authorized visitors, such as inspectors and Realtors.
The inputs are wirelessly fed into a client-accessible Web-based dashboard, enabling REO managers and their property management firms to know instantly when something has gone awry, potentially saving millions of dollars in damage across entire portfolios.
Alerts are available, too, which can summon police and save your properties from becoming drug labs, gang hangouts and crash pads.
Ultimately, entire neighborhoods benefit, in addition to your REO management efforts.
There's more good news - these innovations are neither expensive nor difficult to implement.
That is one of the beautiful things about Web-based technologies. They do not typically require system changes to be readily integrated and they usually charge by the transaction, thus you only pay for what you get. The interfaces are based on popular Web applications, so your people already know how to use them.
In short, they adhere closely to the spirit of what technology is supposed to be all about, which is making life easier for hardworking professionals, not more complicated.
Rich Rollins, founder and chief executive officer of REO Sentinel and National Quick Sale, is a technologist and entrepreneur with extensive experience in mortgage servicing technology. (c) 2008 Mortgage Servicing News and SourceMedia, Inc. All Rights Reserved. http://www.mortgageservicingnews.com/ http://www.sourcemedia.com/