New Inspection Report Helps REO Holders Market Homes to FHA Borrowers
As real estate owned (REO) property holders continue to deal with the glut of foreclosed properties on the market, lenders and investors are continually looking for new ways to market homes and make the properties stand out in the crowded field of distressed asset sales. At the same time, the disappearance of subprime and other mortgages created a void in the origination market. Federal Housing Administration (FHA)-backed mortgages are increasingly becoming a source of funding to replace those products, especially for first-time buyers, entry-level homeowners and others wanting to purchase a home, but have limited capital for a down payment. Altisource Portfolio Solutions (ASPS), a real estate portfolio services provider, introduced a new inspection report with increased data and repair information on subject properties. According to the company, while a traditional property inspection report outlines the general condition of a property, the new report includes information on the existence and condition of appliances, carpets or other flooring, and whether electrical systems are functioning. “The objective here is to equip our customers with information on these properties early on in the process so they can determine, according to the repair value, what buyer they can attract,” Tara Williams, Altisource vice president of field services, told HousingWire. In order for a borrower to use an FHA-backed loan to buy a property, the home must meet certain standards for livability. The new property report can detail what repairs need to be made so the home can be sold to an FHA buyer. If the bank or investor wants to market a home to FHA mortgage borrowers, the owner will know up front what repairs the house needs to meet eligibility requirements. By getting that information up front, the lender or investor can be better positioned to market a property and sell it faster, Williams said. “The market will truly be saturated with REO properties and we’ve exhausted all the workout options available to us,” Williams said. “So it’s about how to differentiate your REO from the one next door.” Of course, providing that information to clients allows Altisource additional opportunities to generate revenue from its preservation services division. But independent real estate professionals conduct room-by-room inspections, similar to a pre-sale inspection to compile the reports, which Altisource said ensures accuracy in the reports. Write to Austin Kilgore.