Bulk REO Video Training

Defaulted mortgages create a backlash whose effects are felt by not only the lenders, but the economy as a whole suffers as well.  A bank’s ability to borrow is negatively effected by around 900% when a mortgage defaults.  If the property in question is defaulted on, leaving $100,000 owed, the mortgage lender is hindered from borrowing up to $900,000 until the property is unloaded.  Also, as the defaulted asset loses value the lenders must record the adjusted value, thereby taking a great financial hit.

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

Lenders hands are all but tied when trying to solve the blow non-performing assets place on them.  Foreclosure is almost always the last action banks take.  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.  REO properties increase the chance for liability every minute they sit unoccupied, amplifying the risk that the asset will further nose dive.  Last but not least, there is the marketing and transaction expenses that go hand in hand with selling real estate of any kind.

Furthermore, lenders mus face the problem of staffing.  It matters little that a lender feels the only option is to foreclose if proper staffing can’t be put in place to manage and unload these REO properties.  The last time a major lending crisis of this proportion took place was about 15 years ago when REO experts among the lending staffs were let go, much to the detriment of banks and buyers alike.  Not to mention the fact that the US has few experts capable of handling bulk REO’s while juggling the task of managing them, protecting them and divesting them with a low margin of 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.

Once again, an excellent solution to this debacle appears to be effective Bulk REO Investing.




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