The housing market is white-hot in some areas, with too little inventory driving up prices in many metros. That makes it easy to overlook metro areas where foreclosures are actually increasing. While overall U.S. foreclosures were down 20% in the second quarter compared to last year, according to ATTOM Data Solutions, 13% of metro areas saw an increase in foreclosures this year, including Houston, Oklahoma City, and Hartford, Connecticut — all up by double digits.
Like most things in real estate, the reality of the market is hyper-local.
And despite home price appreciation, the market could see even more foreclosures as the number of Federal Housing Administration loans rise. According to the Department of Housing and Urban Development, in 2016 FHA loans accounted for only 17% of newly originated mortgages, but comprise 34.1% of all over-30-day delinquent loans. If you’re a servicer, the potential for increased foreclosures could catch you flat-footed.
Luckily, HousingWire has you covered. Several of the white papers hosted on our Knowledge Center this month cover this very topic, from different angles.
Altisource outlines the importance of using data to make decisions in your disposition strategy, noting that the waterfall strategy used by many servicers does not come close to optimizing their decisions:
“In decision theory, waterfall resolution could be referred to as a 'satisficing' approach, a combination of 'satisfy' and 'suffice.' The goal in a satisficing approach is to find a 'good enough' outcome when individuals either cannot access all information required to make a decision or are overwhelmed by the volume of data. Even if individuals could access all information, they cannot synthesize the information available to them to create a focused action plan. By definition, a waterfall approach is likely suboptimal.”
The Altisource white paper delineates a comprehensive solution that leverages all the data servicers have at their disposal.
Auction.com highlights the role technology can play in connecting buyers and sellers of distressed assets, helping communities in the process:
“Since selling bank owned real estate is a subtly different transaction than transferring property from one consumer to another, web-based technology to facilitate these deals differs from traditional multi-listing system (MLS) or consumer-facing real estate search websites.”
Auction.com’s white paper discusses how both buyers and sellers can benefit from the efficiencies of an online auction process. “In our experience, allowing the open market to compete for distressed properties and convert those assets back into stabilized homes produces a greater net return for financial institutions, especially when we see lower volumes on the market,” the white paper states.
Meanwhile, ServiceLink makes the case for a streamlined tech solution that organizes default services in a central marketplace, including title, valuation, property inspection, asset management and closing services:
“Like the technology transformation that has occurred (and continues to occur) across the mortgage industry, the need for greater efficiency and improved transparency during the management and disposition of defaulted mortgage assets is significant. For example, a variety of in-house professionals and external business partners typically work on a defaulted mortgage file. One team may work on the file during the foreclosure (or deed-in-lieu) process; those who are charged with managing and preserving the REO asset may add notes and other information to the file; and the sales channel team that will market the property may include a list of interested prospects and results. It’s no wonder that there can be gaps in communication anywhere across the process. When this happens, information from various service providers doesn’t get passed along to the seller, making optimal decision-making more difficult.”
If you’re a servicer looking to gain efficiencies in the disposition process, the Knowledge Center may have just what you need. Click here to access these resources and more.