Preservation Keeps REO in the Sales Market
REOMAC is gearing up for it's fall conference in Hollywood, Fla., where economist Christopher Thornburg will provide cutting-edge information and predictions regarding the economics of the country and the world.
The organization, which was founded in 1985, continues to stay in tune with the needs of the industry. Shelley Kaye, president of REOMAC, says the nonprofit trade association, which has 1,400 members, remains dedicated to offering unique education and networking opportunities.
The membership of REOMAC, which includes a balanced mix of mortgage lenders, servicers, attorneys, title representatives, asset management outsourcers, real estate brokers and a wide variety of associated vendors, has seen a huge change in the marketplace over the past few years.
"It's mind-boggling to see the transition in the industry," observes Ms. Kaye, who worked at Option One for 11 years as coordinator of REO before becoming a consultant at ACC Capital. "I remember [at Option One] in the beginning assigning 300 files. When I left in May there was 17,000 files."
The issue of rising foreclosures has touched everyone in REOMAC and in the mortgage market as a whole, including every lender no matter how cautious they were with their loans, she says. "It's hitting every aspect of the economy. You only have to read the paper and understand."
With foreclosures fresh on everyone's mind, during a special town hall session at the upcoming conference, panelists will get to interact and discuss the latest in the important topics of loss mitigation, pricing REOs and effective marketing strategies.
"Outsourcing is increasing. Lenders can't hire fast enough," she says. "When you have volume fluctuating, you can't just hire 20 people. If volume lessens in six months lenders can't get rid of those 20. An outsourcer is responsible for the volume and the lender can stabilize his staff."
REOMAC is constantly arranging for guest speakers to educate its members about what is going on in markets around the country. For instance, at the organization's last meeting in Chicago, a representative from the troubled building bureau discussed community initiatives.
"It's important to hear their opinions and what they are looking for. Agents need to know these things - to find out what departments like this are doing in their cities to help the city grow and not deteriorate. I felt, listening to them, that I understood their position a lot more than the asset manager battling them. It helps to work with these city officials - to not be adversaries but work together as a team," she said.
In today's market Ms. Kaye says the hardest thing now is that there are not enough programs for buyers to purchase homes. "There are many qualified buyers out there and many programs that need to be put in place for these buyers. The lenders are making it more difficult for buyers to purchase homes. It's a real challenge even for qualified buyers."
Lenders are being too strict perhaps, she adds. "It is taking longer to close. There is a lot more fallout of loans. The appraisers are getting nervous. The appraisals are finally catching up with the marketplace. But they are calling out things that normally wouldn't be called out. Let's get some good loans out there. If that happens, I think we'd ease some of the pain of the marketplace."
With the government removal of seller-assisted loans like AmeriDream, good borrowers aren't getting loans, says Ms. Kaye. "People are getting so nervous about them, removing the loans that are really there to help the lower-income buyer - someone who can afford the house but doesn't have the downpayment. It is stopping financing and creating a hardship."
Ms. Kaye says the problem is everyone has blamed the lenders for the foreclosure problems and increase in REO. "Yes, maybe some were too aggressive. They put loans into place that people needed and demanded. I think it's time people start taking responsibility for being greedy and jumping into the market maybe they should not have jumped into," she declares.
Instead of looking at buying a home as homeownership, Ms. Kaye believes a lot of individuals saw it as a way to make money. "Investors jumped in and everything escalated the price of the loans. If they didn't jump in, they thought the market would pass them by. People who shouldn't have got one jumped and got a home. People were going in and thought, 'If I can't afford the home, I will make so much money I could sell the house later and get out of it. The reality is it always stops."
Ms. Kaye thinks Congress needs to stop blaming only the lenders for what has happened. "Our politicians are looking for someone to blame. The public didn't use common sense to get what they really could afford. And now we're doing everything we can to keep these people in their homes," she said.
"It is making it harder for lenders and putting them out of business. It can't keep going down the path it's going. I think we are going to see an easing up and see some goods loans put in place."
With the influx in real estate-owned assets, property preservation companies are busier than ever taking care of properties for lenders. Mortgage companies have to use trained REO agents who are familiar with local markets to do the job well.
"The bank will call agents and give them listings. Being an agent is very hard work. The lenders are getting smarter, realizing we don't want to bring the neighborhoods down."
Lenders are scrutinizing properties, making repairs in areas where it is a logical move. "You want the property to look like a typical home for sale. If we fix them up, we can sell them to the end user."
In an area where the lender knows it is difficult for an owner occupant to make payments, there will be a focus to rent the property out or target an investor. "If you have a really nice neighborhood and it's the worst property on the street, you want to go in and fix it up. You don't want it to be the worst."
Today asset managers are going in to properties and doing a lot with paint and carpet to preserve these assets. "We recognize too that the first-time homebuyer just doesn't have the resources to fix it up and purchase it. Lenders can fix it and get better value for the property. The buyer is able to purchase the property on a good loan with no money out of pocket. They can just move in." (c) 2008 Mortgage Servicing News and SourceMedia, Inc. All Rights Reserved. http://www.mortgageservicingnews.com/ http://www.sourcemedia.com/