Technology Improves Short Sales
Fort Worth, TX-The process of completing a short sale is often equated to an emotional rollercoaster for everyone involved. But cutting-edge technology combined with employee skill-set can enhance the process and help lenders, servicers and REO agents manage the key communication points.
The current fallout rate on short sales is 60%-70%, according to Chris Saitta, chief executive officer of REOTrans, Los Angeles. On a recent technology panel at a default servicing show here, Mr. Saitta said it's crucial to get the financial information and keep it current using a technology system so agents do not have to resubmit packages or borrower financials.
"On the lender servicer side, they have some real challenges. A lot of times, they are not fully delegated on these properties. They have to go to their investors or the MI companies and they need to get approval for this. During that process, they are waiting for approval. You don't know what's happening. Your buyer and current homeowner are getting nervous with the process because they don't see a clear path," said Mr. Saitta.
"By technologies communicating, the system can point out, this is step one of MI approval. We're in step two of investor approval. Technology can take something that right now averages six or seven months, down to 40-60 days, which is a manageable timeframe. It will give everyone a clear path that there is a return on investment."
There is currently about a 55% recidivism rate on the loan modifications taking place, he added. As that happens, those properties will flow through to REO.
"I think there is going to be a big uptick on short sales. In the top five REO states right now, the average listing price is only 52% of what's called the unpaid principal balance. In the top five REO states, most people's home are worth about half of what they owe on it. A short sale is a solution to that."
Because foreclosure moratoriums are lifting, this is a good time for REO agents to start planning for scalability. Mr. Saitta said there is a dramatic backlog of properties coming through the pipeline, and the industry will start to see that in the next month through the end of 2009.
"During the holidays typically a lot of lenders and servicers will adopt moratoriums. We might see it slow through December and January with February picking up again. Now is the time to put some technology in place and provide for that scalability."
Mr. Saitta suggested that industry providers should provide data and trends on the status of foreclosure moratoriums and foreclosure volumes, pushing that information through a vehicle like Twitter.
During the panel, Marnie Blanco, vice president, e-business, Re/Max International Inc. in Denver, said social networking devices such as blogs, Youtube, LinkedIn, Facebook and Twitter provide a unique way to communicate by sharing messages or a link to your personal website. But Ms. Blanco pointed out it's important to know your social media channels. "Each one works a little bit differently and has a different audience," she said.
"Facebook is your network, your friends, you control it. You allow who you want to be friends with and who can see what. Twitter is set up with a handle or name. You follow people, but remember people can follow you. You don't get to choose who follows you. It's basically legalized stalking. So, you need to be careful what you are saying out there. Not only are you having your network following you but also your competitors. Don't forget to research to see how all these websites and accounts are linked together."