Equator is in Dallas this week drumming up business for its new REO segmentation product, which is coming to market in the wake of the Obama administration's recent proposal for REO bulk sales.

John Vella, chief operating officer of Los Angeles-based Equator, said the segmentation — still in the testing phase — is an overlay for Equator's existing REO module. The REO module automates the REO process for servicers, outsourcers, real estate agents and vendors. It tracks things like vendor management, pre-listing valuations, inspections and occupancy management.

The segmentation overlay will allow mortgage servicers, investors, hedge funds, mortgage insurers and governmental agencies, among others, to determine "what's the best marketing strategy for your REO portfolio," Vella said in an interview with HousingWire.

It looks at losses, costs and timelines and could be useful to investors buying and managing bulk REO portfolios. It is meant to be a risk management, pricing and operational tool for the mortgage industry, Vella said.

The software will parse out specific information. For example, it can look at the expected return on a portfolio if it is held for 90 days, for example, or it could be used to look at prospective returns for a variety of time frames.

Still, Vella expressed some skepticism about whether bulk REO sales will take off in any grand way.

"Bulk REO sales sounds good but no one knows the bottom of the market yet," he said. "You don't want to be the first one out there to price a bulk REO." Buyers, meanwhile, will be asking, "am I buying at the right time?" he said.

Vella said key interest in the REO segmentation at this point is coming from servicers that Equator has met with while in town for the Five Star Default Servicing Conference & Expo.

Morgan Stanley (MS: 18.161 +0.06%) said investors are interested in acquiring distressed properties in bulk to rehabilitate them into rentals, if the government approves such a plan.

Analysts expect investors would only buy into the program if they are able to charge market rents and obtain tax breaks or deferrals, however.

The delinquency rate for U.S. mortgages more than 30 days past due but not in foreclosure hit 8.34% in July, up 2.4% from the previous month, according to Lender Processing Services (LPS: 16.86 +1.87%).

LPS said 4.4 million properties were classified as more than 30 days past due in July, the most recent data available, while 1.89 million were listed as more than 90 days past due.

Write to Kerry Curry.

Follow her on Twitter @communicatorKLC.