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Fighting Blight

As the end of 2017 quickly approaches and we set our sights on 2018 there are always a number of articles on predictions for the New Year and trends that will be taking place. This not only occurs on a grand consumer scale, but also in niche industries such as asset and default management.

In 2017 we experienced historically low foreclosure rates with many industry experts predicting those levels to remain pretty constant in 2018. With so much talk and articles being written about foreclosures reaching historical lows, many people falsely believe that our work is done. This is one thought and trend that could not be further from the truth.

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Foreclosures are still taking place, individuals are struggling to pay their taxes, and communities are forced to deal with vacant properties and the negative impact they have on our communities. Yes, we have come a long way over the past couple of years- but our work in helping restore communities is far from over.

Blight is real and continues to plague communities nationwide. Municipalities across the country are working to turn the page on the housing market collapse and address the ongoing concerns of community blight. The negative impact has been well documented that blight has on communities. These include: abandoned buildings and vacant properties, which create opportunities for crime, violence, drugs and other illegal activity.

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Blight has additional adverse effects on communities besides crime, such as a decline in property values, lower tax base and heavy burdens on the resources of municipalities. These challenges are real and will not go away just because foreclosures are declining.

The goal in 2018 is to make these communities Safe, Sound and Secure. It starts by helping to restore these communities one property at a time. To accomplish this, there needs to be collaboration amongst mortgage servicers, municipalities, local governments, policymakers, state and federal regulators, contractors and vendors who have boots on the ground and the individuals living in these neighborhoods.

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It is clear that a “one-size-fits-all” approach to blight doesn’t work. There are some over-arching strategies such as clear boarding, improved vacant property registration, and new regulations from Fannie Mae and Freddie Mac that can be applied across the country to help reduce blight.

The key to successfully fighting blight is collaboration between the parties listed above to create individualized community programs- that increase awareness of blight, leverage skills and expertise, and pull together resources for the common good.

As we close out 2017 and prepare for 2018, let’s not forget that there is still a great need to come together to fight and eliminate blight in our communities.

About The Author

Nickie Badalamenti-Kalas
Nickie Badalamenti-Kalas is president at Five Brothers. She works directly with Five Brothers CEO, Joe Bada, to oversee the daily operations and long term strategic vision of Five Brothers. A dynamic entrepreneur, business leader, and skilled executive who brings leadership, insight, and new strategies that drive customer satisfaction, revenue growth, and profitability.

A Wave Of New Scrutiny

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The servicing market has changed significantly since the mortgage market imploded in the mid-2000s where we saw dramatic increases in loan defaults and foreclosure volumes. These heightened volumes impacted servicers and those companies handling default services, property preservation and REO disposition. While REO, short-sales and foreclosures have existed for quite some time, the sudden influx of foreclosures and rapidly expanding REO inventories lead to significant growth opportunities in a sector that traditionally flew under the radar.

Featured Sponsors:

 

 
REO and property preservation no longer fly under the radar. The increases in foreclosure volumes also ushered in a wave of new scrutiny from the OCC, DOJ and CFPB. Servicers were forced to deal with a flood of new rules and regulations on the federal, state, and local municipality levels which resulted in greater scrutiny, higher fines and higher costs to perform the required property preservation and REO services.

Even though we are emerging into a more stable REO market, asset management servicing firms are still being pressed to be able to dispose of REO properties in a timely and compliant manner.

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To improve results, stronger field execution is paramount. Servicers need to look for an REO asset manager with an experienced nationwide network of field service specialists who can act quickly and effectively to optimize the value and marketability of their REO properties. This involves much more than simply securing and maintaining the physical asset. The provider must be staffed with REO professionals – including vendor management specialists and broker specialist teams – capable of working closely with real estate professionals, vendors, title companies, law enforcement officials and attorneys to assure better outcomes at every phase of REO asset disposition.

A nationwide network that includes both brokers and field service professionals provides an up-close, informed view of each property, particularly if the asset manager also provides upstream pre-foreclosure services. This early and ongoing exposure arms the asset manager with the property-specific knowledge and experience needed to apply the most efficient, effective approach for each asset in the lender’s REO inventory.

Featured Sponsors:

 
The key is rapid deployment of knowledgeable field resources on a neighborhood-by-neighborhood, property-by-property basis that can accurately and compliantly deliver proven results. Providers who can perform at this level are re-defining responsive REO service.

Servicers can expect a number of benefits as they strengthen relationships with asset management companies capable of working effectively across both REO and pre-foreclosure fronts:

>> Shorter Asset Resolution Cycles – Actively managed brokers move REO properties in less time than do unmanaged brokers. Working with asset managers offering direct local monitoring of individual brokers, lenders can expect to move properties in 90 days or less. Re-assigning unsold properties to new brokers – a costly and time-draining process – is rarely needed. In addition, when resources are focused at the neighborhood and individual property level, there is a greater incidence of properties selling above asking price.

>> Reduced Costs – Lower commissions and/or fees, economies of scale, and stronger asset control with fewer compliance problems deliver substantial cost-saving potential.

>> Smarter Property Marketing – Experience-based knowledge of each property and neighborhood leads to smarter valuations and more productive selling strategies. With in-depth REO expertise and proven strength on the ground, well-integrated asset management firms are able to create and apply the right marketing approach for each REO property.

>> Pre-Marketing – With in-depth, experience-based knowledge acquired before a property becomes part of the client’s REO portfolio, asset management companies offering both pre-foreclosure and post-foreclosure services are uniquely positioned to create and apply the right marketing approach for each REO property. This includes recommending auction or traditional sales methods, preparing detailed property/market analysis, as well as providing turn-key auction management or assigning a broker, as appropriate.

>> Marketing – REO asset managers who can offer comprehensive property marketing services are helping REO properties return maximum market value in minimum time. Qualified providers offering direct local execution and oversight can mount complete marketing campaigns, including detailed weekly marketing reports. Most importantly, they can and assume full responsibility for individual broker monitoring/evaluation, a distinct advantage over the arms-length relationships characteristic of many REO asset disposition programs.

>> Closing Services – Well-qualified REO asset management organizations can provide the people and expertise to coordinate and certify closing documents, organize and attend the closing, collect and distribute funds, and disseminate closing information. All in strict accordance with client, legal and regulatory requirements (title procurement, HUD-1 review and approval, escrow/closing coordination). These capabilities and more are well within the scope of forward-thinking REO asset management organizations prepared to excel in the new integrated service environment.

Effective marketing is critical to successful REO asset disposition. However, to be consistently effective, REO Marketing is best understood as part of the overall asset management process, not a substitute for it.

Disposition Alternatives

With today’s REO inventories, not all properties are suited for sale through traditional channels. Alternate strategies, particularly for low-value, high-risk properties, must be identified, assessed and implemented, as appropriate. REO asset management providers with strong field service networks can be highly effective partners in helping to leverage these opportunities, whether bulk transactions, transfers to development agencies or public auction. That said, property-by-property marketing continues to represent the most effective alternative for the majority of REO assets.

Property-by-property optimization of REO assets requires independent process management and localized control. What’s needed is an REO asset management partner, who knows the property and its pre-sale history, can plan and execute property preservation/enhancement services, understands municipal ordinances and code compliance issue, and can objectively assess, select and manage local brokers.

The Right REO Partner

With in-depth, experience-based knowledge acquired before a property becomes part of the client’s REO portfolio, asset management companies offering both pre-foreclosure and post-sale services are uniquely positioned to create and apply the right marketing approach for each REO property. This includes recommending auction or traditional sales methods and preparing a detailed property/market analysis, as well as providing turn-key auction management or assigning and managing a broker, as appropriate

The right REO service provider can deliver maximum REO results in minimum time. Qualified providers offering direct local execution and oversight can mount complete marketing campaigns and property-by-property follow up, including on going detailed progress reports. Most importantly, they can assume full responsibility for individual broker monitoring/evaluation, a distinct advantage over the arms-length broker relationships characteristic of many REO asset disposition programs. Successful REO asset disposition means knowing the property and tailoring a marketing strategy to match; and second, being able to apply independent, on-the-ground monitoring of the disposition process. Integrated REO asset management companies with strong field service networks are uniquely qualified on both fronts.

Comprehensive Solution, One single Source

The fact is, disposition of REO assets is a multi-front affair. Success means winning a series of small but important battles. It takes knowledge of the property and local market awareness to critically assess BPOs and the brokers who provide them. It takes experience and follow through to evaluate and monitor property-marketing activities. It takes strong field presence to assure the grass is cut, trash is removed, interiors aren’t gutted or vandalized, the HOA isn’t ready to enforce a lien, and fines for municipal code violations aren’t accruing. It takes people, skills and know-how to negotiate cash for keys.

Integrated REO asset management providers with proven pre-sale and post-sale capabilities are in the strongest position to help servicers address these and other needs critical to REO asset success.

Improving and streamlining default and REO processes will remain a primary focus of servicers and their field services partners as regulatory compliance becomes more urgent and complex. The field service provider’s first step in navigating these realities will be to become an even more capable and efficient resource – a true problem-solving partner who understands both broad market forces and the servicer’s particular needs and business circumstances.

About The Author

Nickie Badalamenti-Kalas
Nickie Badalamenti-Kalas is president at Five Brothers. She works directly with Five Brothers CEO, Joe Bada, to oversee the daily operations and long term strategic vision of Five Brothers. A dynamic entrepreneur, business leader, and skilled executive who brings leadership, insight, and new strategies that drive customer satisfaction, revenue growth, and profitability.

Collaboration Is Key To Asset Management

The mortgage industry continues to be forced to adjust to new and ever-changing regulatory demands-on both the origination and servicing fronts. This is especially true for servicers and property preservation companies tirelessly working to protect the quality of neighborhoods from foreclosure blight.

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Even though the inventory of foreclosed properties is stabilizing, there is still intense pressure to maintain them in a way that satisfies the myriad of local and municipal codes, prompting servicers to reevaluate their Service Level Agreements (SLA’s) with their vendor partners.

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Magnifying the challenge, loans serviced on behalf of the GSEs, the FHA, and VA have extensive guidelines, fee schedules, and ever-changing regulatory requirements that servicers must adhere to when protecting and preserving properties.

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The guidelines, however, do not include provisions to address all of the potential discrepancies that can result in local and municipal code violations. It is extremely difficult for the guidelines to take into account all of these local requirements.

And yet, with the increase in oversight from the CFPB, and OCC, servicers are required to compliantly adhere to all local laws. When you add in the multitude of regulations, legislation and oversight enacted at the federal, state and municipal levels, the challenge to comply is often overwhelming.

A declining market with great pressure to comply and fewer resources mandate a need for collaboration within the industry.   The real answer is a collective effort to devise solutions.

Servicers and asset management companies need to come together to leverage each other’s expertise in a highly collaborative way. One that allows the servicers to meet constantly changing investor and regulatory demands while partnering with the preservation companies to deliver compliant field services in a timely and accurate manner. That’s where collaboration is key.

Property preservation continues to play a vital role for the servicing industry. It’s a role that increasingly includes helping servicers balance investor property preservation guidelines with adhering to federal, state, and local codes.

With the influx of new rules and regulations, property preservation is not just about securing a lock or boarding up a window; it is about preserving the look and overall values of neighborhood properties as if it were your own.

The only way to accomplish this is for servicers and asset management firms to collaborate with one another by leveraging each other’s knowledge, expertise, and network of field service representatives.

About The Author

Nickie Badalamenti-Kalas
Nickie Badalamenti-Kalas is president at Five Brothers. She works directly with Five Brothers CEO, Joe Bada, to oversee the daily operations and long term strategic vision of Five Brothers. A dynamic entrepreneur, business leader, and skilled executive who brings leadership, insight, and new strategies that drive customer satisfaction, revenue growth, and profitability.

Helping Servicers Thrive

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Last month, Nickie Badalamenti-Kalas, President at Five Brothers, said that the servicing market has changed significantly since the mortgage market imploded in the mid-2000s where we saw dramatic increases in loan defaults and foreclosure volumes. These heightened volumes impacted servicers and those companies handling default services, property preservation and REO disposition. While REO, short-sales and foreclosures have existed for quite some time, the sudden influx of foreclosures and rapidly expanding REO inventories lead to significant growth opportunities in a sector that traditionally flew under the radar. So, how can mortgage servicers be successful? Here’s what Badalamenti-Kalas said about that to our editor:

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Q: What are the key trends and most pressing issues facing servicers as it relates to asset management and field services?

NICKIE BADALAMENTI-KALAS: We are seeing legislation that has an impact on our industry, and the methods in which we are able to reasonably protect and preserve the collateral investment associated with home loans.

The mortgage industry continues to adjust to new and ever-changing regulatory demands, which is becoming increasingly more complex. This is especially true for servicers and asset management companies tirelessly working to compliantly protect their assets.

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With the influx of new rules and regulations, property preservation is not just about securing a property or boarding up a window; it is about preserving the look and overall values of neighborhood properties as if it were your own.

Q: In addition to those mentioned, do you see other important regulatory issues on the horizon?

NICKIE BADALAMENTI-KALAS: There has been legislation implemented in June, 2016 that applies to first lien mortgage holders and loan servicers regarding inspections, securing and maintaining with a $500 daily penalty for failure to follow the statute.

Q: How is technology helping to improve results for today’s mortgage servicers?

NICKIE BADALAMENTI-KALAS: Technology has made significant advances in our ability to deliver reliable, repeatable and accurate data. Together with advances in our ability to train vendors in the field, manage subcontractors with proof of service, geo-mapping and the ability to provide data immediately from the field. Technology reduces processing time and allows for controls to be implemented.

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Servicers have to adapt to this new regulatory environment by finding innovative ways to do the important work of protecting and maintaining assets. Investors today demand transparency. To provide this degree of information, asset management providers must deliver innovative technology solutions that ease the burden of the field service representative while delivering in-depth information to the investors.

Q: How is technology helping servicers handle the influx of new rules and regulations?

NICKIE BADALAMENTI-KALAS: Technology can be an organizational tool, a training tool and a method in which property preservation companies can automate redundant tasks. Additionally, technology offers the opportunity to manage a myriad of rules and regulations that are specific to the findings at a particular property.

Q: What are the most pressing issues the industry is facing in preserving and maintaining properties?

NICKIE BADALAMENTI-KALAS: Risk mitigation is a key issue today. There has been great deal of media focus associated with the removal of personals, and the perception that property preservation vendors and banks/ sub-servicers are somehow complicit in breaking into homes and removing personal property. We all know there are a variety of circumstances that contribute to making a reasonable judgment call that a property has become vacant. However, we are seeing the judicial system weigh in. In Jordan v. Nationstar Mortgage, LLC, the state of Washington Supreme Court on July 7, 2016, held that entering and securing a property before foreclosure completion by changing the locks constitutes “taking possession” in violation of Washington State law.

Q: How can Servicers and field services companies work together to address these market conditions?

NICKIE BADALAMENTI-KALAS: There is a general consensus that servicers together with field service companies need to take a more aggressive position while the property is in presale. A more robust approach is believed to reduce the need for more costly repairs down the line, diminish code violations and preserve curb appeal and property value.

A declining market with great pressure to comply and fewer resources mandate a need for collaboration within the industry.   The real answer is a collective effort to devise solutions.

Servicers and asset management companies need to come together to leverage each other’s expertise in a highly collaborative way. One that allows the servicers to meet constantly changing investor and regulatory demands while partnering with the preservation companies to deliver compliant field services in a timely and accurate manner. That’s where collaboration is key.

Q: What should servicers be looking for in an asset management provider?

NICKIE BADALAMENTI-KALAS: First, providers must have a vast vendor network that has the depth and scope of coverage to be provide quality results while adhering to timeline expectations. Reliable data collection that allows for introspective analytics to support industry solutions and providing pre-foreclosure and post-sale services that allow for the preservation of market values and REO asset disposition.

Insider Profile

Nickie Badalamenti-Kalas is president at Five Brothers. She works directly with Five Brothers CEO, Joe Bada, to oversee the daily operations and long term strategic vision of Five Brothers. A dynamic entrepreneur, business leader, and skilled executive who brings leadership, insight, and new strategies that drive customer satisfaction, revenue growth, and profitability.

Industry Predictions

Nickie Badalamenti-Kalas thinks:

1.) A servicer’s ability to maximize assets and minimize risk will continue to be a pressing issue in the year to come.

2.) Technology advances will enhance our ability to deliver reliable, repeatable and accurate data.

3.) Servicers and asset management companies will need to continue to come together to leverage each other’s expertise in a highly collaborative way to address today’s most challenging issues.

Progress In Lending
The Place For Thought Leaders And Visionaries

The New World of REO Disposition

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The servicing market has changed significantly since the mortgage market imploded in the mid-2000s where we saw dramatic increases in loan defaults and foreclosure volumes. These heightened volumes impacted servicers and those companies handling default services, property preservation and REO disposition. While REO, short-sales and foreclosures have existed for quite some time, the sudden influx of foreclosures and rapidly expanding REO inventories lead to significant growth opportunities in a sector that traditionally flew under the radar.

Featured Sponsors:

 

 
REO and property preservation no longer fly under the radar. The increases in foreclosure volumes also ushered in a wave of new scrutiny from the OCC, DOJ and CFPB. Servicers were forced to deal with a flood of new rules and regulations on the federal, state, and local municipality levels which resulted in greater scrutiny, higher fines and higher costs to perform the required property preservation and REO services.

Featured Sponsors:

 
Even though we are emerging into a more stable REO market, asset management servicing firms are still being pressed to be able to dispose of REO properties in a timely and compliant manner.

To improve results, stronger field execution is paramount. Servicers need to look for an REO asset manager with an experienced nationwide network of field service specialists who can act quickly and effectively to optimize the value and marketability of their REO properties. This involves much more than simply securing and maintaining the physical asset. The provider must be staffed with REO professionals – including vendor management specialists and broker specialist teams – capable of working closely with real estate professionals, vendors, title companies, law enforcement officials and attorneys to assure better outcomes at every phase of REO asset disposition.

Featured Sponsors:

 
A nationwide network that includes both brokers and field service professionals provides an up-close, informed view of each property, particularly if the asset manager also provides upstream pre-foreclosure services. This early and ongoing exposure arms the asset manager with the property-specific knowledge and experience needed to apply the most efficient, effective approach for each asset in the lender’s REO inventory.

The key is rapid deployment of knowledgeable field resources on a neighborhood-by-neighborhood, property-by-property basis that can accurately and compliantly deliver proven results. Providers who can perform at this level are re-defining responsive REO service.

Servicers can expect a number of benefits as they strengthen relationships with asset management companies capable of working effectively across both REO and pre-foreclosure fronts:

>> Shorter Asset Resolution Cycles – Actively managed brokers move REO properties in less time than do unmanaged brokers. Working with asset managers offering direct local monitoring of individual brokers, lenders can expect to move properties in 90 days or less. Re-assigning unsold properties to new brokers – a costly and time-draining process – is rarely needed. In addition, when resources are focused at the neighborhood and individual property level, there is a greater incidence of properties selling above asking price.

>> Reduced Costs – Lower commissions and/or fees, economies of scale, and stronger asset control with fewer compliance problems deliver substantial cost-saving potential.

>> Smarter Property Marketing – Experience-based knowledge of each property and neighborhood leads to smarter valuations and more productive selling strategies. With in-depth REO expertise and proven strength on the ground, well-integrated asset management firms are able to create and apply the right marketing approach for each REO property.

>> Pre-Marketing – With in-depth, experience-based knowledge acquired before a property becomes part of the client’s REO portfolio, asset management companies offering both pre-foreclosure and post-foreclosure services are uniquely positioned to create and apply the right marketing approach for each REO property. This includes recommending auction or traditional sales methods, preparing detailed property/market analysis, as well as providing turn-key auction management or assigning a broker, as appropriate.

>> Marketing – REO asset managers who can offer comprehensive property marketing services are helping REO properties return maximum market value in minimum time. Qualified providers offering direct local execution and oversight can mount complete marketing campaigns, including detailed weekly marketing reports. Most importantly, they can and assume full responsibility for individual broker monitoring/evaluation, a distinct advantage over the arms-length relationships characteristic of many REO asset disposition programs.

>> Closing Services – Well-qualified REO asset management organizations can provide the people and expertise to coordinate and certify closing documents, organize and attend the closing, collect and distribute funds, and disseminate closing information. All in strict accordance with client, legal and regulatory requirements (title procurement, HUD-1 review and approval, escrow/closing coordination). These capabilities and more are well within the scope of forward-thinking REO asset management organizations prepared to excel in the new integrated service environment.

Effective marketing is critical to successful REO asset disposition. However, to be consistently effective, REO Marketing is best understood as part of the overall asset management process, not a substitute for it.

Disposition Alternatives

With today’s REO inventories, not all properties are suited for sale through traditional channels. Alternate strategies, particularly for low-value, high-risk properties, must be identified, assessed and implemented, as appropriate. REO asset management providers with strong field service networks can be highly effective partners in helping to leverage these opportunities, whether bulk transactions, transfers to development agencies or public auction. That said, property-by-property marketing continues to represent the most effective alternative for the majority of REO assets.

Property-by-property optimization of REO assets requires independent process management and localized control. What’s needed is an REO asset management partner, who knows the property and its pre-sale history, can plan and execute property preservation/enhancement services, understands municipal ordinances and code compliance issue, and can objectively assess, select and manage local brokers.

The Right REO Partner

With in-depth, experience-based knowledge acquired before a property becomes part of the client’s REO portfolio, asset management companies offering both pre-foreclosure and post-sale services are uniquely positioned to create and apply the right marketing approach for each REO property. This includes recommending auction or traditional sales methods and preparing a detailed property/market analysis, as well as providing turn-key auction management or assigning and managing a broker, as appropriate

The right REO service provider can deliver maximum REO results in minimum time. Qualified providers offering direct local execution and oversight can mount complete marketing campaigns and property-by-property follow up, including on going detailed progress reports. Most importantly, they can assume full responsibility for individual broker monitoring/evaluation, a distinct advantage over the arms-length broker relationships characteristic of many REO asset disposition programs. Successful REO asset disposition means knowing the property and tailoring a marketing strategy to match; and second, being able to apply independent, on-the-ground monitoring of the disposition process. Integrated REO asset management companies with strong field service networks are uniquely qualified on both fronts.

Comprehensive Solution, One single Source

The fact is, disposition of REO assets is a multi-front affair. Success means winning a series of small but important battles. It takes knowledge of the property and local market awareness to critically assess BPOs and the brokers who provide them. It takes experience and follow through to evaluate and monitor property-marketing activities. It takes strong field presence to assure the grass is cut, trash is removed, interiors aren’t gutted or vandalized, the HOA isn’t ready to enforce a lien, and fines for municipal code violations aren’t accruing. It takes people, skills and know-how to negotiate cash for keys.

Integrated REO asset management providers with proven pre-sale and post-sale capabilities are in the strongest position to help servicers address these and other needs critical to REO asset success.

Improving and streamlining default and REO processes will remain a primary focus of servicers and their field services partners as regulatory compliance becomes more urgent and complex. The field service provider’s first step in navigating these realities will be to become an even more capable and efficient resource – a true problem-solving partner who understands both broad market forces and the servicer’s particular needs and business circumstances.

About The Author

Nickie Badalamenti-Kalas
Nickie Badalamenti-Kalas is president at Five Brothers. She works directly with Five Brothers CEO, Joe Bada, to oversee the daily operations and long term strategic vision of Five Brothers. A dynamic entrepreneur, business leader, and skilled executive who brings leadership, insight, and new strategies that drive customer satisfaction, revenue growth, and profitability.

Services Must Adapt Or Risk Extinction

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The number of homes in some stage of foreclosure and the number of seriously delinquent mortgages continued to decline in May, falling to the lowest level since October 2007, according to the latest data from CoreLogic.

CoreLogic’s May 2016 National Foreclosure Report shows the national foreclosure inventory, which is the total number of homes at some stage of the foreclosure process and competed foreclosures, hovers around 390,000 homes.

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In April, the national foreclosure inventory was roughly 406,000 homes, and in March, that figure was 427,000 homes. According to CoreLogic’s report, May’s foreclosure inventory hit the lowest level in nearly nine years.

CoreLogic’s report also showed that in May, the foreclosure inventory declined by 24.5% and completed foreclosures declined by 6.9% compared with May 2015.

The number of completed foreclosures nationwide decreased year after year from 41,000 in May 2015 to 38,000 in May 2016, which represents a decline of 67.9% from the peak of 117,813 in September 2010.

CoreLogic’s report also showed the sustained improvement in the number of mortgages in serious delinquency, defined as loans that are 90 days or more past due, and loans in foreclosure or Real Estate Owned.

According to CoreLogic’s report, the number of mortgages in serious delinquency fell by 21.6% from May 2015 to May 2016, with 1.1 million mortgages, or 2.8% of all mortgages, in this category.

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The May 2016 serious delinquency rate is also the lowest in nearly nine years, reaching the lowest level since October 2007.

Additionally, CoreLogic’s report showed, on a month-by-month basis, completed foreclosures increased by 5.5% to 38,000 in May 2016 from the 36,000 reported for April 2016.

“Delinquency and foreclosure rates continue to drop as we experience the benefits of a combination of tight underwriting, job and income growth and a steady rise in home prices,” said Anand Nallathambi, president and CEO of CoreLogic.

“We expect these factors to remain in place for the remainder of this year and for delinquency and foreclosure rates to decline even further,” Nallathambi said.

Magnifying the challenge, loans serviced on behalf of the GSEs, the FHA, and VA have extensive guidelines, fee schedules, and ever-changing regulatory requirements servicers must adhere to when protecting and preserving properties.

The guidelines, however, do not include provisions to address all of the potential discrepancies that can result in local and municipal code violations. It is impossible for the guidelines to take into account all of these local requirements.

And yet, with the increase in oversight from the CFPB, and OCC, servicers are required to compliantly adhere to all local laws.

So what does this mean for servicers and the default management and field services companies that serve them?

This clearly demonstrates the immediate need to adapt to these rapidly changing market conditions in order to survive. Ed Delgado, President and CEO of the Five Star Institute, a provider of education and training programs for the mortgage industry, told Wall Street Journal writer Joe Light that companies which are slow to adapt to the changing real estate environment may be in trouble.

“There’s a risk of extinction for companies that are either slow to realize the change in the market or simply don’t adapt. You can expect to see both contraction and extinction of some of these organizations,” Delgado said.

Companies that avoid extinction must focus their attention in the following key areas: organizational health, ability to change and adapt, problem solving, leveraging expertise, embracing technology, and the ability to partner with one another to move the industry forward.

Organizational Health

Let’s begin with organizational health. In a book by Patrick Lencioni titled “The Advantage”, Lencioni explains why organizational health trumps everything else in business.

Lencioni states, “The single greatest advantage any company can achieve is organizational health. Yet, it is ignored by most leaders even though it is simple, free, and available to anyone who wants it.” He adds, “the health of an organization provides the context for strategy, finance, marketing, technology and everything else that happens within it, which is why it is the single greatest factor determining an organization’s success.

“Once organizational health is properly understood and placed in the right context, it will surpass all other disciplines in business as the greatest opportunity for improvement and competitive advantage.”

“A good way to recognize health is to look for the signs that indicate an organization has it. These include minimal politics and confusion, high degrees of morale and productivity, and very low turnover among good employees.”

“An organization that is healthy will inevitably get smarter over time. That’s because people in a healthy organization, beginning with the leaders, learn from one another, identify critical issues, and recover quickly from mistakes. Without politics and confusion getting in their way, they cycle through problems and rally around solutions much faster than their dysfunctional and political rivals do.”

Isn’t that what we are forced to do in these challenging market conditions?

“The financial cost of having an unhealthy organization is undeniable: wasted resources and time, decreased productivity, increased employee turnover, and customer attrition. The money an organization loses as a result of these problems, and the money it has to spend to recover from them is staggering.” This is why organizational health is critical to servicers and the default management companies’ long-term survival.

“Turning an unhealthy company into a healthy one will not only create a massive competitive advantage and improved bottom line, it will also make a real difference in the lives of the people who work there.”

Organizational health doesn’t happen overnight, but there are four disciplines that need to be adhered to make the process work.

1.)Build A Cohesive Leadership Team

2.)Create Clarity

3.)Overcommunicate Clarity

4.)Reinforce Clarity

“When an organization’s leaders are cohesive, when they are unambiguously aligned around a common set of answers again and again and again, and when they put effective processes in place to reinforce those answers, they create an environment in which success is almost impossible to prevent,” States Lencioni.

Creating a healthy organization is the foundation that will allow servicers and default management companies to not only survive, but also thrive in today’s challenging market conditions.

Once the foundation is properly built, there are five attributes that will allow a healthy organization to leapfrog the competition and prosper. These are especially true for companies in the financial services industry dealing with constant change.

These include: adaptability, problem solving, leveraging expertise, embracing technology, and the ability to partner with one another to move the industry forward.

Adaptability

The one thing that is certain in today’s market is change. Organizations must be able to adapt and handle constantly changing market conditions, the influx of new rules and regulations, changing investor requirements, heighten scrutiny, new SLA’s and the list goes on and on. Therefore, adaptability is a vital attribute that organizations must exhibit moving forward.

Problem Solving

The status quo is no longer acceptable. Companies can’t continue to do things the way that they always have if they expect to survive. Today companies must be able to proactively analyze market trends, interpret the impact of changing regulations on their clients’ business and constantly solve potential problems before they arise.

Leverage Expertise

Servicing and default management companies that entered the market in the last 5-8 years have limited or no experience in dealing with a declining foreclosure market. To survive, it is critical for companies to leverage the expertise of companies that have the experience and knowledge needed to adapt to these changing market conditions.

Embrace Technology

Technology can be a great enabler, but companies must think outside the box on how to solve today’s most pressing challenges. With the influx of new rules and regulations, property preservation is not just about securing a lock or boarding up a window; it is about preserving the appearance of neighborhoods and maintaining homes as good as the house next door.

Servicers must adapt to this new environment by finding innovative ways to do the important work of protecting and maintaining assets.

Investors today demand transparency, the kind that results from a vast number of data points. To provide this degree of information, field service providers must deliver innovative technology solutions that ease the burden of the field service representative while delivering a robust data set to the investors. The days of a field servicer walking around with a clipboard and an outdated camera are long gone.

The speed at which servicers can get information from their property preservation company is a critical factor in quality control. Mobile technology significantly speeds up this process.

Strategic Partners

Servicers can’t be expected to carry this entire loan themselves. They need to leverage strategic partnerships with default management companies that can effectively help the servicers navigate these challenging market conditions. The partner must understand the importance of continuously monitoring compliance changes, industry changes, and business trends that may impact your organization.

Don’t risk extinction. The time to adapt is now.

About The Author

Nickie Badalamenti-Kalas
Nickie Badalamenti-Kalas is president at Five Brothers. She works directly with Five Brothers CEO, Joe Bada, to oversee the daily operations and long term strategic vision of Five Brothers. A dynamic entrepreneur, business leader, and skilled executive who brings leadership, insight, and new strategies that drive customer satisfaction, revenue growth, and profitability.

Mobile Tech’s Role In Property Preservation

With the influx of new rules and regulations, property preservation is not just about mowing a lawn, securing a lock or boarding up a window; it is about preserving and maintaining the appearance of each home and neighborhood in a compliant and expedited manner.

Servicers have adapted to this new environment by finding innovative ways to do the important work of protecting and maintaining these assets through the use of mobile technology.

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To meet today’s demanding regulatory requirements servicers and investors today demand property information in a timely manner, which requires visibility and transparency into multiple data points throughout the preservation process. To provide this degree of information, field service providers must deliver innovative technology solutions that ease the burden of the field service representative while delivering dynamic data to the servicer and investor.

The days of a contractor walking around the property with a notepad and an outdated camera are long gone. Putting the power of mobile in the palm of their hands is a game-changer.

The speed at which servicers can get information from their property preservation company is a critical factor in quality control. Mobile technology significantly enhances this process.

The right mobile property preservation solution brings a host of innovative technology capabilities to the job, making it faster, more accurate and more profitable for the parties involved. This type of solution should include:

>> Comprehensive, at-a-glance order review showing the field representative the status of every order: current, rejected and completed. It’s everything a field services professional needs for a complete picture of their workflow…without the error prone paperwork.

>> Intuitive, step-by-step Q&A format guides the person in the field through every work order requirement. There are no skipping steps and no extra steps. Contractor training time is significantly reduced with greater reporting accuracy.

>> Automatic compliance alerts keep everyone in the field informed regarding business critical documents. One that automatically reflects federal, state, local, and investor specific requirements.

>> GPS enabled functions allow for route-to-site mapping and geo-tagged photos, which provide date and time stamping to satisfy compliance regulations.

>> Real-time order review/order submission gives complete order information control; when the field representative is satisfied, a tap on the screen submits it for approval. Precise orders, from the field property reporting, faster payments.

Five Brothers FiveLive solution is the workflow management system that automates virtually every step of the work order process in real-time. For more than 40 years, Five Brothers has provided innovative, regulatory-compliant default management solutions that enable commercial and residential mortgage servicers nationwide to maximize asset preservation while reducing costs, streamlining operations and optimizing borrower relationships.

About The Author

Nickie Badalamenti-Kalas
Nickie Badalamenti-Kalas is president at Five Brothers. She works directly with Five Brothers CEO, Joe Bada, to oversee the daily operations and long term strategic vision of Five Brothers. A dynamic entrepreneur, business leader, and skilled executive who brings leadership, insight, and new strategies that drive customer satisfaction, revenue growth, and profitability.