After an exhaustive selection process that’s gone on for more than a year, Freddie Mac selected two new vendors to outsource real estate owned property disposition.
According to a memo Freddie’s HomeSteps REO sales division sent to its REO listing brokers and obtained by National Mortgage News, San Diego-based Atlas REO Services and Salt Lake City-based Green River Capital will join Dallas-based Vendor Resource Management to manage and dispose of Freddie’s REO portfolio, which totaled 72,079 properties at the end of 2010, according to Freddie’s annual financial filing with the Securities and Exchange Commission.
A Freddie Mac spokesperson confirmed the memo’s accuracy and said it expects to publicly announce the deal later this week.
Since the onset of the foreclosure crisis, Freddie has relied on a sole vendor, VRM, to handle its entire REO disposition operation. This strategy varies significantly from the practice broadly accepted in the industry, where multiple outsourcing vendors are hired to handle portions of a portfolio. In some circumstances, an REO owner or manager will have an internal group to handle property disposition alongside the outsourcers.
With multiple outsourcers, an REO owner can benchmark and grade the work and production of its vendors. For example, at Fannie Mae, an internal group handles approximately 60% of Fannie’s REO holdings, which totaled 162,489 properties at the end of 2010 in the company’s year-end results. The remaining 40% are assigned to a group of 16 outsourcers. Each month, Fannie rates the outsourcers against each other and its internal group. The top performers are recognized with additional business—more REO property assignments—the following period.
Outsourcing companies are not allowed to publicly discuss their relationships with Fannie and Freddie, but executives at some of the 16 Fannie outsourcers explained the arrangement to NMN on the condition their names and companies would not be disclosed.
Vendors familiar with Freddie’s selection process told National Mortgage News that the initial request for proposal was issued in summer 2009.
Atlas REO Services and Green River Capital are among the 16 Fannie Mae outsourcers. Atlas has offices in San Diego, Denver and Dallas, with 190 employees performing REO disposition work for four clients. Atlas principals Gregg Buckley and David Hovley previously held positions in the REO shop at GMAC, now known as Ally Financial.
Green River Capital has more than 200 employees across its three business units, the outsourcing unit and Green River Financial, a short sale program provider, and Infinity Valuation Services, a broker price opinion company.
Both Atlas REO Services and Green River Capital were founded in 2003.
