There’s no shortage of prognosticators telling us of a coming flood of REO homes on the market. OK, a lot of those soothsayers have something to sell you – be it the likes of Lamco Network, REO Vendor Manager, REO Network, numerous REO consultancies and coaches like REO Renegades, SuperStarREO etc. – their message is all the same – join our network, pay the fee, you need to be in all the right places when the flood gates open and the REOs start pouring on the market.
And hey – it’s legit! I believe it, that explains the copious quantity of dollars flowing from my bank account to some of the above-mentioned outfits. A lot of folks will point to data provided by our friends at RealtyTrac (who, coincidentally, also have a product to sell you), which, if you believe them, say there are…jeez, I forget how many, 4-5, 7+?… million homes across the United States at some point in the foreclosure process right now. Of course, they are quick to point out, not all of these properties will go REO – some will be sold via short sale, some will get loan modifications, etc. – but that no matter how you slice it, there’s a lot of REO coming down the pike, although it’s likely to come more as a steady stream rather than an outright flood as many of my colleagues in the REO Brokerage business seem to be hoping for.
Well, that was then. Now, klaxon bells are sounding and the blogosphere is in an uproar – they’re pulling the plug on foreclosures! It started with Ally/GMAC but quickly spread to JPMorgan Chase, Bank of America – and now others. The New York Times has a couple good articles on the subject (Foreclosure Furor Rises, The Gathering Storm over Foreclosures), that old salty dog Bloomberg weighs in on it (Hydra of Foreclosure Probes). A lot of states’ Attorneys General area getting in on the act, including our own Jerry Brown and the attorney general of Connecticut has ordered a halt to all foreclosures – while at the moment the foreclosures have ground to a halt only in judicial foreclosure states, it seems likely that it own’t be long before it spreads to non-judicial states like California. And of course there’s no shortage of grandstanding politicians at the national level, either. This could get messy (not that it isn’t already – foreclosure is a somewhat messy business).
Perhaps not surprisingly, all of this hubbub has actually reached its way down from on high and touched our business here at the Silicon REO Group. Two days ago, I received via RES.NET a task to list one of the properties I had in pre-marketing. Awesome! I fired off the tasks to the appropriate people on the team – flyer design, MLS entry, ordering the sign up, filing the paperwork with my brokerage, posting on Craigslist, etc. Hours after seeing the RES.NET task, the property was listed.
And then, yesterday – kaboom! An email from the asset manager arrived saying that the property needs to be pulled of the market, any marketing be discontinued, and that no offers/contracts would be negotiated on it at this point. Of course, I’m expected to maintain the property and continue doing MSRs (monthly status reports) BPOs and whatnot while we wait to see if the property is to be re-listed, or…or what? Give the property back to the former owner because there was an error in the foreclosure process?
Somehow…I don’t see that happening. All this hue and cry about the MERS system and flawed titles, by the way – much todo about nothing if you ask me. But people have advertising to sell to eyeballs looking to see the banks get theirs and hapless underwater homedebtors hoping and searching for how they can get relief for overextending themselves in the easy money mania of a few years back. And I get that, and it’s fine, do what you gotta do, it’s a free country, right?
Although I’m no sage, and I’m the farthest thing from a legal or financing expert – I predict that all this will be just water under the bridge in a few months’ time. For all the social tumult and government inquiries and TARP, HAMP, HAFA, HARP and a whole alphabet soup of other catchy acronyms – the foreclosure train rolls on, and I think it’s going to keep on rolling until the root causes of the crisis are behind us (negative equity, unsustainably high home prices, unemployment). From the sound of it, we’re still some years away from working through it all. So I’m prepared for lots of foreclosure drama in the headlines for some time to come – and you should be too.