Two big banks look local to sell foreclosures
Bank of America (BAC) and JPMorgan Chase (JPM) made a change to how they resell their inventory of foreclosed homes late last year, which could bring more business to minority-owned real estate firms. In late 2010, both banks shrank the maximum radius a real estate agent could operate from a previously foreclosed property, or REO. Before bank balance sheets became flooded with delinquent properties, it was not uncommon for banks to allow an in-network broker more than 20 miles away to sell a property. Now in order for an REO broker to receive an assignment to resell a BofA REO, the broker must now be based within 15 miles of the property. For Chase, the radius dropped to five miles. "We believe this helps ensure that agents are able to provide good service and better reflects the neighborhoods where the properties are located," a BofA spokesperson said. The median foreclosure rate from January 2007 to June 2008 was roughly 8.4% in low-income minority neighborhoods, compared to 6.3% in low-income white neighborhoods, according to the Department of Housing and Urban Development. Yet minority-owned brokerages have long been shut out of the REO business even as these abandoned properties sat unattended in their own backyard. Gary Acosta, the chairman for New Vista Asset Management and co-founder of the National Association of Hispanic Real Estate Professionals said in his experience, working more with real estate agents from these neighborhoods has resulted in more owner occupants buying these properties and at a faster rate. "I think there is a real desire to list these properties with brokers who know these neighborhoods and speak the language," Acosta told HousingWire. "We can sell more to owner occupants and keep more of the wealth in these communities." Rep. Maxine Waters (D-Calif.) introduced an amendment to a bill in April that would require the Federal Housing Finance Agency Inspector General to report on how Fannie Mae and Freddie Mac select REO vendors and recommend how to improve the process. Waters specifically wants the new reporting to ensure that qualified REO listing agents and vendors have the opportunity to compete for contracts and assignments for properties in their area. The amendment was withdrawn in April to revise certain language. Neither bank could give immediate numbers on how many new brokers their asset managers have employed since the rule change. Acosta said these banks could still do more, including putting how many REO properties are sold to owner occupants on asset manager and broker scorecards. "I think services should take it one step further. I think they need to follow through by actually measuring the outcomes that are desired are actually being fulfilled," Acosta said. Write to Jon Prior. Follow him on Twitter @JonAPrior.