B of A Tackles REO Growth By Ramping Up Its Hiring

Bank of America is preparing for increases in short sales and in its real estate owned effort. The company again will ramp up hiring in 2010 as it did last year when it doubled its staff in the short sale business.

“We will continue to grow that team to support the incoming volume,” says Matt Vernon, a former origination executive, who was recently appointed to lead the company’s effort in residential short sales and REO dispositions. He is expected to add former originations personnel into the mix to help combat the bank’s growing REO portfolio.

“It’s important to have the right amount of people and resources stacked against the volume that is currently in our portfolio and what we expect to see in the future. We are focusing on the role we play as an intermediary between the homeowner and the ultimate investor.” Mr. Vernon will move from the bank’s production unit over to its servicing division in an effort to move foreclosed properties off its balance sheet. Prior to this assignment he worked for the bank as an enterprise sales executive, leading origination and cross-selling efforts through its 6,000 retail locations.

Thanks to its acquisitions of Countrywide Financial Corp. and Merrill Lynch & Co., BoA has one of the largest portfolios of troubled mortgages in the nation, according to nonperforming loan figures compiled by Managing REO.

The goal of the division is to connect better externally with its homeowners and Realtor partners that are involved in short-sale transactions. “We want to improve what we have today through people, process and technology with very aggressive communication. That’s something we are very good at on the origination side of the house,” Mr. Vernon told Mortgage Servicing News.

“But we recognize what we need to improve on the servicing side of the business is that balance between homeowner-investor, who ultimately owns the asset we are negotiating on behalf of, and the intermediaries in the transaction, those brokers and Realtors who are helping the homeowner navigate through.”

Mr. Vernon says strong similarities exist between the short sale/REO side of the business and the origination side. Both share a large focus on the homeowner and customer. “Realtors are very involved on the short-sale process and the REO side of the business. There’s a lot of synergies between what I did on the origination side and what we do on the servicing side today.”

Short sales, in particular, are very complex and challenging transactions, Mr. Vernon points out.

“A short sale is a very new animal to those externally, and frankly, our associates, on how to navigate it. It’s a complex transaction where Bank of America is the servicer negotiating as a third party with a first mortgage investor, potentially a second mortgage investor, and potentially an MI investor, all on behalf of a consumer, with a Realtor and a customer that expect to move the property expeditiously,” he said.

“Those timelines might not match up with that complex negotiation process. I think we also have a huge opportunity for Bank of America and our peers in the industry to educate our associates, the Realtors involved in the transaction, and ultimately, the customer. If you go back two and a half years and poll consumers on what a short sale is, your not going to get a lot of knowledge there.”

The company recently introduced a Web portal called Equator to allow real estate professionals as well as customers to have real-time status updates on their transactions. The industry-known technology was formerly called REOTrans, which was used predominantly on the REO side, but BoA has introduced it to the short-sale side. “Package that with aggressive communication protocols. We’ve heard loud and clear from Realtors in the business and homeowners that they need to be informed,” adds Mr. Vernon. “When they are not informed and they do call in, they need responsive communication as opposed to one where they have to repeatedly call in to us. That’s where my focus is: blocking and tackling of communication protocols while we begin to put in people, process and technologies pieces.”

Bank of America supports federal legislation like the Protecting Tenants in Foreclosure Act, which has spawned similar state laws in New York and Illinois.

“I think it’s very prudent of a large servicer such as us, on behalf of our investors, to remain very tied both to what is happening at a broad legislative background, but then also in what is happening in specific communities across the country,” he said. “Especially those that have been hit hard — think about Detroit and Chicago, and the Florida marketplace and some of the markets in California.”