Increased oversight should help the Federal Housing Administration sell more repossessed homes quickly, and at the right price.
Vicki Bott, the Department of Housing and Urban Development's deputy assistant secretary for single-family housing programs, said the FHA's revamp of its management and marketing programs last year, which split property preservation from asset management functions, will ensure that asset managers get paid only when a property is sold.
Before the changes were completed in December, HUD had just one contractor in each geographic region that did everything from conveying the property to the department to maintenance to listing and selling the home.
"I'd be paying [for] property preservation even if they didn't sell the home, so they had constant income and were not motivated to sell," Bott said. "Now, if field service managers are slow, the asset manager may tell on them, and it gives us some eyes and ears on the ground."
Under the new system, HUD has multiple managers in each region with separate functions, so HUD can compare them to one another. HUD also may start looking at the process of how real estate agents are chosen for listings.
"That's something we're starting to evaluate, how diverse is the Realtor database," Bott said. "You need a strong Realtor base and it shouldn't be so tight since the geographic areas are large."
HUD also has hired a consulting firm to track the 17 third-party vendors involved in repossessed properties.
Becky Walzak, the president of Walzak Consulting Inc., a Deerfield Beach, Fla., risk management provider that is analyzing data provided by the HUD vendors, said the goal is to measure current processes so HUD can improve returns.
"What they needed was a way to track these vendors to make sure the properties aren't languishing out there," Walzak said. "HUD wants to reward good vendors for quality, reliability and cost control, so those that get ranked the highest get rewarded with more properties."
At yearend the FHA had 62,804 properties in its inventory of real estate owned, a 42% increase from June.
