What’s influencing the increase in REO acquisitions?
HousingWire: According to ATTOM Data Solutions‘ latest foreclosure market report, wall repossessions climbed 9% in the first half of 2023 compared to the first half of 2022. What economic factors are influencing the increase in REO acquisitions?
Michael Chew: First, consider the first half of 2022; some areas were still dealing with or just coming out of pandemic-related foreclosure moratoriums and restrictions. Economic factors aside, the 9% jump in repossessions makes sense.
As for economic factors, several indicators lead me to believe there will be an ongoing increase in REO acquisitions. With inflation, we have seen a subtract in overall household real income. This reduction in real income has unsalaried to credit vellum debt reaching an all-time upper in the United States, with increasingly than $1 trillion owed. Wheels loan defaults are at their highest levels in 15 years, with approximately 20% of wheels loans stuff upside down.
While credit cards and wheels loans aren’t directly related to mortgages, they subsume segments within the three main consumer debt categories. Conventional wisdom would dictate that the third category, mortgages, will follow if two of the three are negatively impacted. The good news for homeowners is that home values in most areas remain stable, and inventory levels for homebuyers are still low.
HW: What does the current market and demand for REO resources squint like?
MC: The demand for REO resources remains strong, with inflows and overall REO inventory levels remaining significantly less than post-Q1 2020 inventories.
What I see impacting the influx of REO are third-party sales at foreclosure. Over the past 18 months, speaking with my colleagues well-nigh REO inflow projections, all have shared that third-party sales worth for 40-70% of the potential REO inventory, depending on the client. The inventory that does make it to REO remains in upper demand. My stereotype days on the market remain low, with multiple offers on most assets. We moreover see investor demand remain strong and an uptick in owner-occupied purchases.
HW: Foreclosure moratoriums and legislation were top-of-mind during COVID-19. How has the foreclosure-related regulatory landscape reverted since 2020 and 2021?
MC: It was a slow process in most areas without the pandemic-related foreclosure moratoriums. By September 2021, however, there was still much foreclosure reluctance. While some foreclosure moratoriums had been lifted, others had been extended or modified. The word-for-word timeline and details varied by jurisdiction.
Today, there is much increasingly collaboration with servicers, regulatory persons and professional associations to provide thoughtful solutions and make policy that exhausts all options surpassing foreclosure.
HW: What role can technology and analytics play in the REO windfall management space?
MC: Technology and analytics are essential in today’s REO windfall management space. Technology has evolved significantly since I started in REO 15 years ago, from the marketing strategy to latter and all milestones in between. I recall going from paper files to a technology platform designed for end-to-end management of the asset.
Today, we have wide analytics that can help REO windfall managers make informed decisions well-nigh pricing, marketing strategies and property disposition, withal with predictive modeling designed to estimate the likelihood of a property stuff sold, the expected time on the market and the potential sale price.
These technologies proffer to our vendors in the field. Property preservation tools like remote monitoring and mobile apps are used to alimony track of property conditions, schedule maintenance tasks, and ensure that properties remain in marketable condition.
Marketing and sales tools that create virtual tours, high-quality photos and detailed property listings that can be hands accessed by potential buyers online. Withal with digital transactions that automate the unshortened sales process, from contract signing to closing, improving efficiency, reducing paperwork and speeding up the overall transaction timeline.