Vance Morris is the director of single-family asset management at the Department of Housing and Urban Development
(HUD). He has been with HUD for 13 years, and before serving at his current position, Morris was the director of single-family program development where he developed credit and valuation policy. He also worked in the lender approval and quality assurance areas.
For this edition of In This Corner
, Morris discusses the recent move by HUD to divide the recent M&M III contracts among field asset services firms and asset management companies and to dispel the myths of HUD properties.
HUD REO properties have a bad reputation. Care to dispel some myths about HUD properties?
All vacant, abandoned, and/or foreclosed properties have a less than desirable reputation. Frequently, HUD is accused of contributing to community blight because that community has a great number of foreclosed homes. The majority of the time that we receive such accusations, research shows that HUD properties represent a very small percentage, 10-20% of these foreclosed homes. Under the upcoming generation of management and marketing (M&M) contracts, field service managers will ensure that properties are maintained upon acquisition from the lenders. The new asset managers will ensure that properties are marketed quickly and sold.
What sort of opportunities are there?
In addition to the existing opportunities of continuing to sell HUD REO properties, real estate professionals now have an opportunity to serve as listing brokers. Asset managers performing services for previous M&M companies and continue to have opportunities to work for the new contractors. With additional contractors serving in the same area, this increases the potential opportunity for more companies to be awarded subcontract agreements.
What in particular did HUD see in the market that warranted the M&M III changes to bifurcate the contracts into asset management and field services companies?
The decision to divide the services into multiple contracts was designed to provide better services. The mortgagee compliance services have been centralized into one location providing lenders with one a one-stop shop. This allows for greater consistency, timeliness, and the ability to better monitor expenses. Having the property management services separated from the marketing services allows the contractors to focus on their particular field of expertise. With multiple contractors serving in the same area, the competition among them will increase productivity and ensure that should one contractor fail, there is someone readily available to take physical possession of properties. We are also centralizing our bid site so that real estate professionals and the public only have one location to search for properties.
What is the most common mistake made when marketing and selling HUD properties?
It is essential that REO brokers and agents know and understand the requirements of selling HUD Homes. Training will be provided by the asset managers, and we encourage all registered brokers and agents to attend periodically to ensure they have the latest information. If brokers are not registered with HUD and think they may be interested in marketing or selling HUD Homes, they should begin the registration process immediately. “How to sell HUD homes” instructions are at hud.gov.
What advice do you have for REO brokers and agents wanting to capitalize on the HUD opportunities?
Be prepared. If you’re not registered with HUD, begin that process immediately as it may take several weeks, and understand the rules and requirements. If insurance or bonding is usually required, ensure those policies are in place. The individual field service managers and asset manager contractors will have their own requirements and qualifications, and anyone interested in working for them should contact them for specifics as soon as possible.
So that the industry can make its adjustments, from you're seeing, can the private sector anticipate the same level of REO inventory, 44,000 properties, as stated in the announcement of the M&M III contracts?
The number of properties in inventory has increased at a slightly lower rate than conveyances, because this is a factor of the number of monthly sales versus the number of monthly acquisitions.
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