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Keeping the Door Open To Home Ownership |
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The Problem with Low Value Loans |
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Low value loans and REO suffer from collections and loss mitigation strategies designed for “big box” servicers. Resource Intensive with Limited Upside: Servicing personnel spend the same amount of loss mitigation time and money on a $300,000 loan as a $30,000 loan but regulators and investors look at unpaid principal value, not loan count, when evaluating servicing performance. Low Value Assets Depreciate Faster: Inferior location, poor condition and simple percentages depreciate low value assets more quickly (e.g. a $2,000 bathroom replacement is 2% of a $100,000 house but 10% of a $20,000 house). Low Value Assets are Difficult to Sell: Aged assets tend to be the lower value assets because brokers (and co-brokers) have the least amount of incentive to sell such assets (and charge minimum commissions when they do). We finance our REO sales: With today’s lending environment the timeline for a potential retail, owner occupied buyer to obtain a loan is too long to efficiently sell a home. We offer competitive seller financing on nearly all of our REO sales. This approach brings in retail buyers not investors looking to rent or “flip” the house. Why give away the asset? Lower value assets are rarely refurbished if foreclosed on and are often sold to investors anyway. Home Servicing invests in its assets and works with borrowers to enhance property. Let your servicer focus on high dollar assets: Traditional servicers can typically manage high dollar assets where there is contact with the borrower. When it comes to foreclosing on low dollar, “no-contact” assets results can be embarrassing. F/C and REO departments can become more efficient if you outsource this specialty to HSLLC. The ever present advancing problem: Advancing on a $25,000 asset can be tricky. We understand when to invest $6,000 into a home in order to avoid a needless “fire sale” to an investor, and attract a retail buyer. This comes from years of experience and management on the ground in these markets. Big Non-Performing Loan Purchasers Attribute Limited Value To Low Value Assets: Large investment funds are an excellent option when selling typical non-performing loan portfolios, but for them, low value assets have “negative economies of scale”. When considering a sale of non-performing loans, segregating the low value assets from the portfolio typically results in a higher overall portfolio recovery. Your low value problem may be a small percentage of your $ losses, but it will most likely be the highest severity problem. We can help! |
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To Buy Property From Home Servicing, Click “Real Estate for Sale” Link Above or Email an Information Request to:
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