Hot Topics at REOMAC Fall Conference
Short sales, code violations and code enforcement will be some of the hot topics presented for discussion at the upcoming REOMAC Fall Conference here on Oct. 14-17.
Shelley Kaye, president of REOMAC, says economist Don Reynolds will be providing the economic forecast at the conference this year. "He was appointed by George Bush as his pension board chairman at one point. I think it will be interesting. He will give us a different point of view." The group is holding a session on code violations, which is a major problem for a lot of lenders, because cities and counties are making money by fining lenders. "I talk with other asset managers, and the cities and counties are making money by fining the lenders. It’s so interesting because the minute they know who the owner of the property is, when it changes hands, that’s when they slap the code violations on,” said Ms. Kaye.
“It’s not like the lender doesn’t want to cooperate. Until we get control of the property and take over ownership, we can’t go in and fix the code violation. For the cities and counties to keep fining when it’s totally out of the lenders’ hands until they become the owner of the property is really a hardship on the lender.”
A lot of times, debris and trash make up these violations. “Until the lender takes over the property, we can’t trespass and clean up lawns if we don't own the property. There are things the owners have done. The cities are seeing ‘the pockets,’ and they then come down on the lender to do the ‘fixing’ for what the homeowner has created.” The topic of rehabbing homes is always a topic at REOMAC. Today, more lenders are going in and doing repairs, but the cities need to have patience with them so they can actually get in there, get the bids and see what needs to be done, she added. “Work with them. Assist them, giving them the wherewithal to fix the property in a timely manner.”
MERS is making sure the cities and counties know the owner of the property, and the lenders can be contacted right away. A lot of times the cities don’t know who the owners are, according to Ms. Kaye.
“We as the lender don’t know that there’s a problem, and there’s a disconnect. I think everybody needs to work together. It’s a really important way to get these properties upgraded and ready to sell. MERS has the contact person. When our properties go on the market, we always want the agents to put up a sign so people know who to contact, so someone from code enforcement comes by, and you can find out right away that there is an issue and get it fixed.”
In areas where there are first-time owners and occupants going in, asset managers do want to go in and rehab the properties. “You don’t want the area to diminish in value. You don’t want the investors to come in and just slap things on there or put someone in without fixing it up.”
Ms. Kaye, a portfolio acquisitions specialist with InSource Financial Services, LLC, says she has been doing repairs for most of the properties that she is selling. We want to put in carpet and paint. We know the buyers don’t have the funds to both purchase the property and go in and do repairs. We’re getting a much better return when we go in and fix the property up.”
A house that is freshly painted can draw the buyer in. The smell of the fresh paint, the smell of the new carpet — it all makes a difference.
“It’s kind of daunting to walk into a house and say, ‘Oh my gosh, look at all the work we have to do.’ I think the mentality of the homeowner, I think they think it is going to cost more than it actually does. In reality, it may be a little fix that won’t cost that much. It’s better for the lender in a lot of cases to go in and do the repairs especially if they’re not too major. You open the property to many more buyers that way. It’s really a smart move to make in this time right now.”
Right now, she says the REO industry is seeing very little hiring. People are anticipating the market will have this big rush of foreclosures and REO, but a lot of companies have done some layoffs because the volume hasn’t been there, she said.
“We’re all anticipating it will go up. For anybody that reads the daily blogs that come in from the industry publications, the indications are that hundreds of thousands of properties that are just sitting there are not on the market. The lenders have held back. Those of us that are not in upper management are sitting here thinking, when is all of this going to break loose?”
Servicers need to train more people for short sales, she said, because that is the wave of the future. “It is in the lender’s best interest and the homeowner’s best interest to go in and do short sales. The property doesn’t deteriorate because it’s vacant. People aren’t getting angry with a foreclosure and they aren’t trashing the properties. The homeowner is in the property. Less vandalism, less deterioration. The lender isn’t sitting there going through the expense of foreclosure.”
If the lender works with the owner of that property on a short sale, it’s a win-win for everybody. “I think the banks are so overwhelmed with people trying to do short sale and loan mods, I don’t think they have hired enough people for that. If you are working with a seller, have a main contact. I think more one-on-one contact is needed with the homeowners.”