Bulk REO Video Training

The impact felt by non-performing assets are detrimental to the economy and mortgage lenders alike.  Non-performing mortgage assets could cripple lenders abilities to borrow by just under 1000%.  Lenders can be blocked from borrowing up to $900,000 on a defaulted loan of just $100,000, that is, until the property is divested.  Plus, as defaulted assets lose value banks are forced to write down the lower value and bear the loss.

(A quick note from the editor:  For related information, check out Bulk REO Investing.)

There aren’t many solutions for banks when it comes to easing the negative impact non-performing assets have on their accounts.  The option of foreclosure is always the last resort.  High legal expenses are the beginning of this costly process that lenders face.  While the property is still REO (Real Estate Owned) it incurs the expense of considerable property management.  The proliferated risk of harm being done to REO properties while they sit empty only increases the chances it will further lose value.  It should also be noted that with the selling of real estate also comes transaction fees and marketing expenses.

An even bigger problem banks face is staffing.  Even if a bank believes that foreclosure is the only feasable answer it has to contend with employing enough people to manage and sell REO’s, especially if there are bulk REO’s on hand.  The last time anyone saw a lending crisis of this magnitude was almost 15 years ago, and not since then have the valuable number of REO experts been lost at such perplexing numbers.  On top of this, the United States has few in-house experts at any of the larger lending institutions who can handle bulk REO’s which need someone to manage them, secure them and sell them with minimal loss.

Without a doubt, today’s servicing agencies and mortgage companies seem to singlemindedly be in agreement to unload troubled loans as quickly as possible even if it means selling at a loss.