If 2010 was the year for market balance…(short sales catching up to or surpassing REO sales), then 2011 should be known as REO Wave 2.0.
Realistically, any homeowner with a job, who was going to try to qualify to modify their mortgage(s) has tried. The banks don’t really want to do shorts sales as they go against the nature of earning revenue by collecting a debt. Two years (Nov 1st 2008) of on and off moratoriums have created a backlog of “shadow” REO’s and a lot of very frustrated REO brokers/agents, contractors, title company’s, and eviction attorneys. “When is the inventory coming back?” is all you hear for the past 24 months. Well the time has come and indications from both the increase in new assignments while still in redemption, and from people on the inside of the banks and outsourcers are saying that once the latest round of moratoriums expire in January 2011, it’s on.
Everyone know that the banks reviewed and alter their “robo stamping” procedures, which is the only reason that the number of monthly foreclosures started fell below 300,000 for the first time. As the new procedures are streamlined, I expect you will see the number of new foreclosures start to reach, over even exceed 400,000 a month.
My best guess is that by the 3rd week of January and say March 15th, the trickle of REO property assignments will resume to a flow. Fannie Mae is telling their LLB’s to stock up on flyers and sign riders now while they are still in inventory. Wells Fargo and BoA began outsourcing their BPO’s to a series of valuation providers in order to handle the increase. JP Morgan Chase, BoA and Fannie Mae have added as many as 15 outsourcers each to handle the expected increase in business. (mind you some of the outsourcing is due to major internal downsizing over the past 2 years)
What does this mean for REO Broker/Agents? First of all, once the flow of REO’s returns, the banks and outsourcers are going to draw from experienced REO Broker/Agents because they really don’t have time to train new ones. Most all of the Banks and outsourcers closed off new Broker/Agent registration over the past two years, although several LSO’s used new Broker/Agent registrations to generate money off of REO agent “wannabees”. Something to keep in mind, your previous Broker/Agent registration expire, and so will your file if you don’t keep it updated. Many of your past Lender, Servicer, Outsourcer (LSO) contacts are long gone, so newly created vendor managers are doing most of the hiring of new Broker/Agents, as well as, new property assignments. Even for the “old timers”, these vendor managers don’t know who you are, and in most cases, you won’t know who they are either (by design) so you’re going to have to keep on your toes, market yourself effectively and make friends who can make recommendations for you.
By the way, it doesn’t matter how many different web portals or zip codes you sign up for, if you aren’t signed up (certified and approved) with the LSO’s directly, you won’t be getting (m)any REO assignments.
Starting in summer of 2009, I had to trim back both my office space, and staff by 2/3′s in order to maintain our team in the black. I anticipate that we should be back to full staff again by 3rd quarter 2011 and that we should hit 2008 sales levels by year-end 2011 (423 closed transactions).
Interesting comment on LSOs generating income from “wannabees”.
The LSO’s are more financially challenged than the agents these days. The fees are keeping there doors open, a the expense of all the “wannabees” trying to get a few REO listings here and there (isn’t going to happen) . the AM’s need to move inventory, not spend time training new agents. I am carrying almost $10,000 in debt for utility bills for REO properties, any given day in this business, and that’s just for utilities, then there is HOA dues, maintenance, repairs, etc. Most “wannabees” can’t even begin to handle that on an ongoing basis. That doesn’t even include a support staff of four full time assistants, rent, etc.