Financial institutions of every size are trying to accelerate REO asset disposition, reduce holding costs and limit liability. But generating the highest level of returns per asset is no easy task, especially when the financial institution is dealing with multiple vendors in the process.
Chronos Solutions recently tackled this problem for a top 10 national servicer, delivering spectacular results: Total hard economic impact achieved for this servicer is currently in excess of $46.9 million in the first 10 months of managing their entire portfolio.
How did Chronos Solutions help the national servicer achieve such stunning results?
First, the servicer’s move to consolidate its REO disposition business to a single vendor was key. Using Chronos Solutions allowed for a streamlined process that gave the servicer direct control over every area involved in REO disposition.
"We are now the only vendor that can provide every service required for REO asset management and disposition," said Chronos Solutions Executive Vice President of Business Development and Marketing Matt Slonaker.
The servicer utilized a number of components offered in Chronos Solutions’ complete end-to-end REO management and disposition service, Asset Portfolio Plus. This service includes valuations and reconciliation, title grading and curative, claims without conveyance of title (CWCOT) eligibility analysis, HOA lien identification, field service inspections, short sales and deed-in-lieu solicitation, title insurance and settlement services.
Chronos Solutions assessed the servicer’s operational processes, business capabilities, policies and procedures, then made recommendations that incorporated target state capabilities, products and services. Chronos then developed and sequenced an implementation road map based on the servicer’s short-term and long-term strategic goals.
"Forward-thinking clients are looking to their vendors to be trusted advisors and business partners who not only provide necessary services, but also contribute thought capital towards the growth and efficiency of their organizations," Slonaker said.
In order to deliver the maximum return for each asset, Chronos Solutions conducts an advanced analysis of individual properties, which the company uses to create customized repair and marketing strategies.
Chronos Solutions has the ability to market every property multiple ways — through Trustee Sale, CWCOT, REO and the Second Chance program — and on average sees 35-45% of properties go into contract within 90 days of the first auction cycle.
Chronos Solutions’ online auction division, RealtyBid.com, pioneered online real estate auctions beginning in 2001, and has achieved sales timetables averaging 23 days or less from start to finish. Utilizing this service to immediately begin processing REO assets jumpstarts the disposition process.
In the servicer’s case, this strategy led to a nearly 50% reduction in portfolio age within a matter of months.
Chronos Solutions also helped minimize risk and exposure to the servicer through its ability to manage assets individually, which facilitated detailed analysis and reporting on daily, weekly and monthly timetables, resulting in virtually day-to-day operational level controls of each asset.
Any vendors engaged by Chronos Solutions on the servicer’s behalf were proven service providers, and by handling the HOA Risk, Title and Auction functionalities internally, the company was able to reduce delays and hand offs by maintaining direct control over the process.
The results speak for themselves.
Chronos Solutions was able to help the client cut carrying costs on an REO asset portfolio by more than $19.2 million and reduced aging by more than 90 days on assets acquired within a one-year period.
Chronos also achieved a sales to value execution ratio of 102.2%, exceeding their 92% ratio by more than 1,000 basis points, and increased asset returns by $24.54 million in the first quarter of 2017.
In addition, Chronos helped the servicer reduce head count by 40 plus employees, saving $3.2 million. The servicer also benefitted from reduced service fees by bundling services such as HOA, Title and Auctions, resulting in an average per service savings of 15% over other providers.
For Chronos Solutions, the work they performed for this top 10 servicer reflects their commitment to customer service for all their clients, regardless of their size, Slonaker said.
"We work with each client as a trusted advisor, assessing individual needs and then recommending sustainable frameworks that will optimize performance, reduce cost, mitigate risk, avoid potential regulatory violations and execute strategic initiatives," he said.