PERSON OF THE WEEK: REOMAC’s Shelley Kaye Provides An REO Update

Many financial institutions are carrying far more real estate owned properties (REOs) than they'd care to. This week, MortgageOrb caught up with Shelley Kaye – president of REOMAC, a not-for-profit trade group serving the default servicing industry – to get her thoughts on how technology and unique marketing can help move REOs.

Q: What do you see as some of the most pressing legislative topics that could potentially impact the default industry in 2009?

Shelley Kaye: There are a couple of pressing legislative topics that can potentially impact the default industry that REOMAC will be covering at our annual Spring Conference next week. One example in California: S.B.306 is aimed at correcting some of the ambiguities in last year's S.B.1137.

S.B.306 will serve to redefine certain terms, such as "borrower," and clarify specific details, such as excluding owner-occupied units of more than four units. Variations of this bill will hopefully reduce the potential litigation issues across the nation.

Q: Fannie Mae and Freddie Mac have both implemented rental initiatives affecting recently foreclosed properties. What do these policies mean, if anything, for servicers? Property managers? The GSEs?

Kaye: Earlier this month, the rental initiatives created by Fannie Mae and Freddie Mac were extended to help the housing market crisis.

Both programs are intended to help residents remain in their homes after a property has been foreclosed by executing a new, month-to-month lease or providing cash up front to assist with moving expenses (i.e., cash for keys). One purpose of this program is to maintain constant occupancy in foreclosed properties in hopes of averting the imminent threat of vandalism and neighborhood deterioration.

The policy will hopefully allow qualified renters to remain in foreclosed properties, mitigate the disruption of personal lives caused by foreclosures, and help stabilize communities impacted by high foreclosure rates.

GSEs, servicers and property managers will benefit from the continued upkeep of the properties, and the possibility that the original owner may be able to repurchase the home under the myriad of new federal programs. In addition, property managers will gain the ability to have a more accessible property when new buyers wish to inspect.

Q: REOMAC recently created a committee focused on the commercial real estate sector. What was the reason for creating the committee, and what do you hope to achieve? Do you anticipate REOMAC will launch other committees in the coming year, and if so, what would you expect their focuses would be?

Kaye: Prior to creating the Commercial Real Estate Committee, REOMAC was primarily focused on residential REO. In light of the imminent tsunami of commercial mortgage defaults and foreclosures, REOMAC felt that it was extremely important to find new and innovative ways to help the private REO industry respond. I, along with the other board members, hope that with the creation of this new committee, we will be able to better serve the private sector of the default industry.

REOMAC named two highly respected commercial real estate professionals, Peter Monroe and John Murray, to co-chair the committee. In addition, we are in the process of selecting other top-notch members that represent all types of commercial product: retail, apartment, hotel, industrial, office and industrial. Currently, REOMAC is focused on developing a program of education, training and certification so that we can contribute to the development of best practices within the commercial REO industry.

Q: What do you identify as the major obstacles in marketing REOs?

Kaye: Major obstacles to selling REOs occur when repairs to the property are needed or recommended. When investors do not want to make the improvements to the property, the property doesn't show well, which will inevitably incur price reductions and delay the sale. Fixing up the property will create a better first-time impression.

Q: What are some of the more creative marketing solutions that you've heard?

Kaye: The foreclosure bus tours are attracting a lot of attention all over the nation and creating an auction buzz atmosphere. Another creative solution is, instead of using traditional open-house signs, use bank-owned open-house signs. This will attract a larger audience on a weekend open house.

Q: How do you see technology advancements affecting REO disposition strategies, both today and moving forward?

Kaye: The use of integrated platforms such as REOTRANS, IMB's systems and RESNET allow instant communication with calendaring of tasks to be completed with visible deadlines for the asset managers and agents to keep the process moving along on a set timetable.

As more companies embrace these real-time platforms, the movement of the transaction from assignment to closing is streamlining the process for all parties to perform to their maximum and shorten the sale cycle.


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