Picture this scenario: A field service company sends an inspector to a potentially vacant and defaulted property. Upon entering the home in the pre-sale stage of the foreclosure process, the inspector discovers the property has sustained severe water damage. Because it is January in the northeast region of the country, that water has frozen, making the interior of the home look like an ice rink.
The field service company reviews the photos and bids to carefully defrost the home and winterize before more damage can occur. The company is worried if the home is left to defrost on its own, it will sustain major water damage and potentially mold. At that point, it could be a total loss before it even reaches foreclosure sale.
This scenario and others play out all of the time with vacant properties awaiting foreclosure. Mortgage servicers are realizing that their focus needs to shift toward mitigating damages in pre-sale to maintain better and more marketable REO properties.
Field service companies can facilitate this shift in focus. They serve as the “eyes and ears” for servicers, maintaining properties in both pre- and post-sale. In doing so, field service companies have put more emphasis on pre-sale mitigation, auditing the work they complete, and concentrating on other ways to protect the value of REO properties in pre-sale in the future.
Focus on pre-sale mitigation
Mortgage servicers are focusing more on mitigating damages in pre-sale in order to get better quality REO properties. They are relying on their field service companies who can offer products like pool and window coverings and interior inspections to help save the value of their assets. The U.S. Department of Housing and Urban Development also has shifted its focus to pre-sale. It has its field service companies remove debris in vacant or abandoned properties in pre-sale. This makes interior and exterior inspections easier to perform.
Auditing
Field service companies, mortgage servicers and investors are coming together to ensure quality through the formal auditing process. The process evaluates quality control, business risk assessment, and vendor onboarding and management. Working together to have in-depth conversations about field service companies processes and procedures can only lead to better, more marketable REO assets.
Protecting Value
While concentrating on mitigating damages in pre-sale is a good step in ensuring quality REO properties, servicers and investors might need to take that idea even further by breaking down the process at the property level. Doing things on a case-by case basis may seem daunting, but ultimately it could save servicers and investors a lot when the property goes to foreclosure sale and then has to compete with traditional homes on the market.
